SECURITIES AND EXCHANGE COMMISSION



Delaware						90-0640593
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

SXC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

~~Large accelerated filer~~

~~Accelerated filer~~

Non-accelerated filer

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ý No

As of July ~~26, 2019,~~31, 2020, there ~~were 91,208,447~~were 82,768,075 shares of the Registrant’s $0.01 par value Common Stock outstanding.

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

(See Accompanying Notes)


	June 30, 2020		December 31, 2019
	(Unaudited)
	(Dollars in millions, except par value amounts)
Assets
Cash and cash equivalents	$	81.1	$	97.1
Receivables, net	49.5		59.5
Inventories	135.2		147.0
Income tax receivable	6.1		2.2
Other current assets	5.2		2.5
Total current assets	277.1		308.3
Properties, plants and equipment (net of accumulated depreciation of $969.5 million and $903.7 million at June 30, 2020 and December 31, 2019, respectively)	1,347.6		1,390.2
Goodwill and other intangible assets, net	36.8		38.1
Deferred charges and other assets	16.9		17.2
Total assets	$	1,678.4	$	1,753.8
Liabilities and Equity
Accounts payable	$	72.9	$	142.4
Accrued liabilities	41.7		47.3
Current portion of financing obligation	3.0		2.9
Interest payable	2.1		2.2
Total current liabilities	119.7		194.8
Long-term debt and financing obligation	768.1		780.0
Accrual for black lung benefits	51.3		50.5
Retirement benefit liabilities	23.5		24.5
Deferred income taxes	162.6		147.6
Asset retirement obligations	14.9		14.4
Other deferred credits and liabilities	22.8		23.6
Total liabilities	1,162.9		1,235.4
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; 0 issued shares at both June 30, 2020 and December 31, 2019	—		—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 98,172,557 and 98,047,389 shares at June 30, 2020 and December 31, 2019, respectively	1.0		1.0
Treasury stock, 15,404,482 and 13,783,182 shares at June 30, 2020 and December 31, 2019, respectively	(184.0)		(177.0)
Additional paid-in capital	714.1		712.1
Accumulated other comprehensive loss	(15.9)		(14.4)
Retained deficit	(28.8)		(30.1)
Total SunCoke Energy, Inc. stockholders’ equity	486.4		491.6
Noncontrolling interest	29.1		26.8
Total equity	515.5		518.4
Total liabilities and equity	$	1,678.4	$	1,753.8

June 30, 2019 December 31, 2018
(Unaudited)
(Dollars in millions, except
par value amounts)
Assets
Cash and cash equivalents $ 102.2
$ 145.7
Receivables 98.9
75.4
Inventories 175.7
110.4
Income tax receivable 3.2
0.7
Other current assets 4.9
2.8
Total current assets 384.9
335.0
Properties, plants and equipment (net of accumulated depreciation of $901.6 million and $855.8 million at June 30, 2019 and December 31, 2018, respectively) 1,454.8
1,471.1
Goodwill 76.9
76.9
Other intangible assets, net 151.4
156.8
Deferred charges and other assets 14.4
5.5
Total assets $ 2,082.4
$ 2,045.3
Liabilities and Equity
Accounts payable $ 137.2
$ 115.0
Accrued liabilities 49.9
45.6
Deferred revenue 13.5
3.0
Current portion of long-term debt and financing obligation 5.1
3.9
Interest payable 3.9
3.6
Total current liabilities 209.6
171.1
Long-term debt and financing obligation 828.0
834.5
Accrual for black lung benefits 46.4
44.9
Retirement benefit liabilities 24.1
25.2
Deferred income taxes 212.8
254.7
Asset retirement obligations 13.4
14.6
Other deferred credits and liabilities 25.3
17.6
Total liabilities 1,359.6
1,362.6
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued shares at both June 30, 2019 and December 31, 2018 —
—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 98,036,174 and 72,233,750 shares at June 30, 2019 and December 31, 2018, respectively 1.0
0.7
Treasury stock, 7,477,657 shares at both June 30, 2019 and December 31, 2018 (140.7 ) (140.7 )
Additional paid-in capital 709.7
488.8
Accumulated other comprehensive loss (13.0 ) (13.1 )
Retained earnings 139.5
127.4
Total SunCoke Energy, Inc. stockholders’ equity 696.5
463.1
Noncontrolling interests 26.3
219.6
Total equity 722.8
682.7
Total liabilities and equity $ 2,082.4
$ 2,045.3

Table of Contents

SunCoke Energy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,							Six Months Ended June 30,
	2019			2018				2020		2019

	(Dollars in millions)							(Dollars in millions)
Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net income	$	15.5		$	24.4		Net income	$	13.7	$	15.5
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense	74.2			64.9			Depreciation and amortization expense	68.2		74.2
Deferred income tax expense	1.8			0.3			Deferred income tax expense	15.0		1.8
Payments in excess of expense for postretirement plan benefits	(1.1		)	(1.1		)	Payments in excess of expense for postretirement plan benefits	(1.0)		(1.1)
Share-based compensation expense	2.1			1.6			Share-based compensation expense	2.3		2.1
Loss on extinguishment of debt	—			0.3
Loss from equity method investment	—			5.4

Gain on extinguishment of debt							Gain on extinguishment of debt	(2.9)		—
Changes in working capital pertaining to operating activities:							Changes in working capital pertaining to operating activities:
Receivables	(23.5		)	(12.0		)	Receivables	10.0		(23.5)
Inventories	(65.3		)	(5.4		)	Inventories	11.8		(65.3)
Accounts payable	23.0			16.8			Accounts payable	(56.9)		23.0
Accrued liabilities	0.2			(9.0		)	Accrued liabilities	(5.5)		10.7
Deferred revenue	10.5			1.5
Interest payable	0.3			(1.3		)	Interest payable	(0.1)		0.3
Income taxes	(2.5		)	—			Income taxes	(3.9)		(2.5)
Other	0.4			(1.1		)	Other	(2.1)		0.4
Net cash provided by operating activities	35.6			85.3			Net cash provided by operating activities	48.6		35.6
Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Capital expenditures	(53.1		)	(43.6		)	Capital expenditures	(36.9)		(53.1)
Sale of equity method investment	—			4.0

Other investing activities	0.2			0.3			Other investing activities	—		0.2
Net cash used in investing activities	(52.9		)	(39.3		)	Net cash used in investing activities	(36.9)		(52.9)
Cash Flows from Financing Activities:							Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	—			45.0
Repayment of long-term debt	(0.6		)	(45.2		)	Repayment of long-term debt	(8.9)		(0.6)
Debt issuance costs	—			(0.5		)
Proceeds from revolving credit facility	175.6			92.5			Proceeds from revolving credit facility	247.2		175.6
Repayment of revolving credit facility	(180.6		)	(92.5		)	Repayment of revolving credit facility	(247.2)		(180.6)
Repayment of financing obligation	(1.4		)	(1.3		)	Repayment of financing obligation	(1.4)		(1.4)
Acquisition of additional interest in the Partnership	—			(4.2		)
Shares repurchased							Shares repurchased	(7.0)		—
Dividends paid							Dividends paid	(10.0)		—
Cash distribution to noncontrolling interests	(14.2		)	(17.7		)	Cash distribution to noncontrolling interests	—		(14.2)
Other financing activities	(5.0		)	0.7			Other financing activities	(0.4)		(5.0)
Net cash used in financing activities	(26.2		)	(23.2		)	Net cash used in financing activities	(27.7)		(26.2)
Net (decrease) increase in cash and cash equivalents	(43.5		)	22.8
Net decrease in cash and cash equivalents							Net decrease in cash and cash equivalents	(16.0)		(43.5)
Cash and cash equivalents at beginning of period	145.7			120.2			Cash and cash equivalents at beginning of period	97.1		145.7
Cash and cash equivalents at end of period	$	102.2		$	143.0		Cash and cash equivalents at end of period	$	81.1	$	102.2
Supplemental Disclosure of Cash Flow Information							Supplemental Disclosure of Cash Flow Information
Interest paid, net of capitalized interest of $2.3 million and $1.3 million, respectively	$	28.0		$	30.5
Income taxes paid, net of refunds of zero and $1.3 million, respectively	$	6.5		$	4.4
Interest paid, net of capitalized interest of 0 and $2.3 million, respectively							Interest paid, net of capitalized interest of 0 and $2.3 million, respectively	$	27.3	$	28.0
Income taxes paid, net of refunds of $0.3 million and 0, respectively							Income taxes paid, net of refunds of $0.3 million and 0, respectively	$	1.4	$	6.5

(See Accompanying Notes)

Table of Contents

SunCoke Energy, Inc.

Consolidated Statements of Equity

(Unaudited)


																										Common Stock							Treasury Stock							Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total SunCoke Energy, Inc. Equity		Non-controlling Interests	Total Equity
	Common Stock			Treasury Stock				Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total SunCoke Energy, Inc. Equity			Non-controlling Interests			Total Equity					Shares			Amount		Shares			Amount
	Shares	Amount		Shares	Amount
																										(Dollars in millions)
At December 31, 2018																									At December 31, 2018	72,233,750		$	0.7		7,477,657		$	(140.7)		$	488.8	$	(13.1)	$	127.4	$	463.1	$	219.6	$	682.7
Net income																									Net income	—		—			—		—			—		—		9.8		9.8		2.4		12.2
	(Dollars in millions)
At December 31, 2017	72,006,905	$	0.7	7,477,657	$	(140.7	)	$	486.2		$	(21.2	)	$	101.2	$	426.2		$	233.4		$	659.6
Net income	—	—		—	—			—			—			8.7		8.7			4.3			13.0
Currency translation adjustment	—	—		—	—			—			(0.1		)	—		(0.1		)	—			(0.1		)
Cash distribution to noncontrolling interests	—	—		—	—			—			—			—		—			(10.6		)	(10.6		)	Cash distribution to noncontrolling interests	—		—			—		—			—		—		—		—		(7.1)		(7.1)
Share-based compensation expense	—	—		—	—			0.8			—			—		0.8			—			0.8			Share-based compensation expense	—		—			—		—			0.9		—		—		0.9		—		0.9
Share issuances, net of shares withheld for taxes	69,187	—		—	—			(0.1		)	—			—		(0.1		)	—			(0.1		)	Share issuances, net of shares withheld for taxes	345,058		—			—		—			(1.7)		—		—		(1.7)		—		(1.7)
Acquisition of additional interest in the Partnership:
Cash paid	—	—		—	—			(1.2		)	—			—		(1.2		)	(2.2		)	(3.4		)
Deferred tax adjustment	—	—		—	—			0.3			—			—		0.3			—			0.3
At March 31, 2018	72,076,092	$	0.7	7,477,657	$	(140.7	)	$	486.0		$	(21.3	)	$	109.9	$	434.6		$	224.9		$	659.5

At March 31, 2019																									At March 31, 2019	72,578,808		$	0.7		7,477,657		$	(140.7)		$	488.0	$	(13.1)	$	137.2	$	472.1	$	214.9	$	687.0
Net income	—	—		—	—			—			—			4.2		4.2			7.2			11.4			Net income	—		—			—		—			—		—		2.3		2.3		1.0		3.3
Currency translation adjustment	—	—		—	—			—			(1.2		)	—		(1.2		)	—			(1.2		)	Currency translation adjustment	—		—			—		—			—		0.1		—		0.1		—		0.1
Recognition of accumulated currency translation loss upon sale of equity method investment	—	—		—	—			—			9.0			—		9.0			—			9.0

Cash distribution to noncontrolling interests	—	—		—	—			—			—			—		—			(7.1		)	(7.1		)	Cash distribution to noncontrolling interests	—		—			—		—			—		—		—		—		(7.1)		(7.1)
Share-based compensation expense	—	—		—	—			0.8			—			—		0.8			—			0.8			Share-based compensation expense	—		—			—		—			1.2		—		—		1.2		—		1.2
Share issuances, net of shares withheld for taxes	129,767	—		—	—			0.8			—			—		0.8			—			0.8			Share issuances, net of shares withheld for taxes	3,715		—			—		—			—		—		—		—		—		—
Cash paid for acquisition of additional interest in the Partnership, net of zero tax	—	—		—	—			(0.3		)	—			—		(0.3		)	(0.5		)	(0.8		)
At June 30, 2018	72,205,859	$	0.7	7,477,657	$	(140.7	)	$	487.3		$	(13.5	)	$	114.1	$	447.9		$	224.5		$	672.4
Simplification Transaction:																									Simplification Transaction:
Share issuances, for the acquisition of Partnership public units																									Share issuances, for the acquisition of Partnership public units	24,818,149		0.3			—		—			182.2		—		—		182.5		(182.5)		—
Share issuances, for the final Partnership distribution																									Share issuances, for the final Partnership distribution	635,502		—			—		—			—		—		—		—		—		—
Transaction costs																									Transaction costs	—		—			—		—			(5.4)		—		—		(5.4)		—		(5.4)
Deferred tax adjustment																									Deferred tax adjustment	—		—			—		—			43.7		—		—		43.7		—		43.7
At June 30, 2019																									At June 30, 2019	98,036,174		$	1.0		7,477,657		$	(140.7)		$	709.7	$	(13.0)	$	139.5	$	696.5	$	26.3	$	722.8

(See Accompanying Notes)

Notes to the Consolidated Financial Statements

Description of Business

SunCoke Energy, Inc. (“SunCoke Energy,” “SunCoke,” “Company,” “we,” “our” and “us”) is the largest independent producer of high-quality coke in the Americas, as measured by tons of coke produced each year, and has over 55 years of coke production experience. Coke is a principal raw material in the blast furnace steelmaking process and is produced by heating metallurgical coal in a refractory oven, which releases certain volatile components from the coal, thus transforming the coal into coke. Additionally, we own and operate a logistics business, which primarily provides handling and/or mixing services of coal and other ~~bulk products and liquids~~aggregates to third-party customers as well as to our own cokemaking facilities.

We have designed, developed, built, own and operate ~~five~~5 cokemaking facilities in the United States (“U.S.”), which consist of our Haverhill, Middletown, Granite City, Jewell and Indiana Harbor cokemaking facilities. Our cokemaking facilities have collective nameplate capacity to produce approximately 4.2 million tons of blast furnace coke per year. Additionally, we have designed and operate ~~one~~1 cokemaking facility in Brazil under licensing and operating agreements on behalf of ArcelorMittal Brasil S.A. (“ArcelorMittal Brazil”), which has approximately 1.7 million tons of annual cokemaking capacity. To diversify our business and customer base, SunCoke has been exploring the foundry coke market and testing production capacity. We expect we will be in a position to produce and sell foundry coke and by-product industrial coke in 2021. Foundry coke is a high-quality grade of coke that is used at foundries to melt iron and various metals in cupola furnaces.

Our cokemaking ovens utilize efficient, modern heat recovery technology designed to combust the coal’s volatile components liberated during the cokemaking process and use the resulting heat to create steam or electricity for sale. This differs from by-product cokemaking, which repurposes the coal’s liberated volatile components for other uses. We have constructed the only greenfield cokemaking facilities in the U.S. in approximately 30 years and are the only North American coke producer that utilizes heat recovery technology in the cokemaking process. We provide steam pursuant to steam supply and purchase agreements with our customers. Electricity is sold into the regional power market or pursuant to energy sales agreements.

Our logistics business provides handling and/or mixing services to steel, coke (including some of our domestic cokemaking facilities), electric utility, coal producing and other manufacturing based customers. Our logistics business consists of Convent Marine Terminal (“CMT”), Kanawha River Terminal (“KRT”), SunCoke Lake Terminal (“Lake Terminal”) and Dismal River Terminal (“DRT”) and has collective capacity to mix and/or transload more than 40 million tons of coal and other aggregates annually and has total storage capacity of approximately 3 million tons.

Our consolidated financial statements include SunCoke Energy Partners, L.P. (the “Partnership”), a wholly-owned subsidiary, which owns 98 percent of our Haverhill, Middletown, and Granite City cokemaking facilities and 100 percent of CMT, KRT and Lake Terminal. During all periods presented, SunCoke is considered the primary beneficiary of the Partnership as it has the power to direct the activities that most significantly impact the Partnership's economic performance.

Incorporated in Delaware in 2010 and headquartered in Lisle, Illinois, we became a publicly-traded company in 2011 and our stock is listed on the New York Stock Exchange ~~(“NYSE”)~~ under the symbol “SXC.”

Basis of Presentation

The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim reporting. Certain information and disclosures normally included in financial statements have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In management’s opinion, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. The results of operations for the ~~periods~~period ended June 30, ~~2019~~2020 are not necessarily indicative of the operating results expected for the entire year. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

~~Recently Adopted Accounting Pronouncements~~

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” ASU 2016-02 requires leases to be recognized as assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. Subsequently, the FASB has issued various ASUs to provide further clarification around certain aspects of Accounting Standards Codification (“ASC”) 842, “Leases.” We adopted the standard effective January 1, 2019 using the modified retrospective transition approach and elected not to adjust prior comparative periods. Upon adoption, the Company recognized right-of-use assets and lease liabilities of $5.1 million at January 1, 2019. See Note 9.

Simplification Transaction

Prior to June 28, 2019, SunCoke owned a 60.4 percent limited partner interest in ~~the Partnership~~SunCoke Energy Partners, L.P. (the "Partnership") as well as our 2.0 percent general partner interest. The remaining 37.6 percent limited partner interest in the Partnership was held by public unitholders. On June 28, 2019, the Company acquired all ~~17,727,249~~of the outstanding common units of the Partnership not already owned by SunCoke ~~in exchange for 24,818,149 newly issued SunCoke common shares~~ (the "Simplification Transaction"). ~~Additionally, the final pro-rated quarterly Partnership distribution was settled with 635,502 newly issued SunCoke common shares.~~ Following the completion of the Simplification Transaction, the Partnership became a wholly-owned subsidiary of SunCoke, the Partnership common units ~~have~~ ceased to be publicly traded and the Partnership’s incentive distribution rights were eliminated. As of January 1, 2020, the

Partnership merged with and into SunCoke controlled the Partnership both before and after the Simplification Transaction. Therefore, the change in our ownership interest was accounted for as an equity transaction, and no gain or loss was recognized in our Consolidated Statements of Income for this transaction.

~~The following table summarizes the non-cash (decreases) increases on our balance sheet related to the Simplification Transaction reflecting the changes in ownership~~Energy Partners Finance Corp. ("Finance Corp."), which is also a wholly-owned subsidiary of the ~~Partnership and a step-up in the tax basis in the underlying assets acquired:~~

(Dollars in millions)
Noncontrolling interest $ (182.5 )
Deferred income taxes $ (43.7 )
Common stock

$ 0.3
Additional paid-in capital

$ 225.9

Company.

Additionally, the Company incurred transaction costs totaling $10.7 million, of which $5.4 million were incurred by SunCoke and were recorded as a reduction to additional paid-in capital on the Consolidated Balance Sheets at June 30, 2019. The remaining transaction costs were incurred by the Partnership, resulting in $4.4 million and $4.9 million of expense included in selling, general and administrative expenses on the Consolidated Statements of Income for the three and six months ended June 30, 2019, respectively, and $0.4 million was incurred during 2018.

The following table summarizes the effects of the changes in the Company's ownership interest in the Partnership on SunCoke's equity:

Increase (decrease) in SunCoke Energy, Inc. equity for the change in ownership interest in the Partnership⁽¹⁾

Increase in SunCoke Energy, Inc. equity for the change in ownership interest in the Partnership⁽¹⁾

(1) Represents the non-cash impact related to the Simplification Transaction.

The components of inventories were as follows:

June 30, 2019 December 31, 2018

(Dollars in millions)
Coal $ 122.5
$ 59.9
Coke 9.3
8.6
Materials, supplies and other 43.9
41.9
Total inventories $ 175.7
$ 110.4


	June 30, 2020		December 31, 2019

	(Dollars in millions)
Coal	$	78.3	$	94.4
Coke	11.1		8.1
Materials, supplies and other	45.8		44.5
Total inventories	$	135.2	$	147.0

4. Goodwill and Other Intangible Assets

Goodwill, which represents the excess of the purchase price over the fair value of net assets acquired, is ~~tested~~assessed for impairment as of October 1 of each year, or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit to below its carrying value. Goodwill allocated to our Domestic Coke ~~and Logistics segments~~segment was $3.4 ~~million and $73.5~~ million at both June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019.

The components of other intangible assets, net were as follows:

June 30, 2019 December 31, 2018
Weighted - Average Remaining Amortization Years Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

(Dollars in millions)
Customer contracts 3 $ 31.7
$ 19.6
$ 12.1
$ 31.7
$ 17.7
$ 14.0
Customer relationships 13 28.7
8.5
20.2
28.7
7.5
21.2
Permits 23 139.0
19.9
119.1
139.0
17.4
121.6
Total $ 199.4
$ 48.0
$ 151.4
$ 199.4
$ 42.6
$ 156.8

Total amortization expense for intangible assets subject to amortization was $0.6 million and $1.3 million for the three and six months ended June 30, 2020, respectively, and $2.7 million and $5.4 million for the three and six months ended June 30, 2019, ~~respectively, and $2.8 million and $5.6 million for the three and six months ended June 30, 2018,~~ respectively.

At the end of each interim period, we make our best estimate of the effective tax rate ~~expected to be applicable for the full fiscal year~~ and the impact of discrete items, if any, and adjust the rate as necessary.

The Company recorded anincome tax expense of $2.2 million and $12.6 million for the three and six months ended June 30, 2020, respectively, resulting in effective tax rates of 22.0 percent and 47.9 percent, respectively, as compared to the 21.0 percent federal statutory rate. Differences between the Company's effective tax rates and the federal statutory rate during the six months ended June 30, 2020 were primarily driven by the revaluation of certain deferred tax assets due to lower apportioned

state tax rates, which resulted in $6.5 million of deferred income tax expense. Additionally, the new tax law passed in response to the novel coronavirus ("COVID-19"), the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was enacted March 27, 2020, allows the Company to carry back net operating losses generated in 2019 to each of the five years preceding 2019. As a result, SunCoke expects to receive income tax refunds of approximately $3.9 million for prior year taxes paid and recorded a tax benefit of $1.5 million during the six months ended June 30, 2020.

The Company recorded income tax expense of $3.2 million and $6.2 million for the three and six months ended June 30, 2019, respectively, resulting in effective tax rates of 49.2 percent and 28.6 percent, respectively, as compared to the 21.0 percent federal statutory rate. Prior to the Simplification Transaction, the income attributable to the noncontrolling interest in the Partnership was not taxable to SunCoke. Upon closing of the Simplification Transaction, this income became taxable to SunCoke and has increased the effective tax rate. Differences between the Company's effective tax rates and the statutory rate during the six months ended June 30, 2019 were primarily due to the impact of state income taxes. With the closing of the Simplification Transaction, the income previously attributable to noncontrolling interest in the Partnership became 100 percent attributable to SunCoke and, therefore, will now be taxable to the Company, which increased the Company's effective tax rate in the current and future periods. The Simplification Transaction also resulted in a $43.7 million decrease to deferred income taxes on the consolidated Balance Sheet at June 30, 2019, which was recorded as an increase to additional paid-in capital, as discussed in Note 2.

The Company recorded income tax expense of $2.2 million and $4.2 million for the three and six months ended June 30, 2018, respectively, resulting in effective tax rate of 11.6 percent and 12.4 percent, respectively, as compared to the 21.0 percent federal statutory rate. The difference between the Company’s effective tax rates and the statutory rate in both periods was primarily the result of earnings attributable to its noncontrolling ownership interests in partnerships.

6. Accrued Liabilities

Accrued liabilities consisted of the following:

June 30, 2019 December 31, 2018

(Dollars in millions)
Accrued benefits $ 14.7
$ 21.2
Current portion of postretirement benefit obligation 3.0
3.0
Other taxes payable 12.6
9.1
Current portion of black lung liability 4.5
4.5
Accrued legal 3.0
4.2
Accrued Simplification Transaction costs 6.4
—
Other 5.7
3.6
Total accrued liabilities $ 49.9
$ 45.6


	June 30, 2020		December 31, 2019

	(Dollars in millions)
Accrued benefits	$	13.9	$	21.7
Current portion of postretirement benefit obligation	2.9		2.9
Other taxes payable	12.2		9.9
Current portion of black lung liability	4.6		4.6
Other	8.1		8.2
Total accrued liabilities	$	41.7	$	47.3

7. Debt and Financing Obligation

Total debt and financing obligation, including the current portion of ~~long-term debt and~~the financing obligation, consisted of the following:

June 30, 2019 December 31, 2018

(Dollars in millions)
7.500 percent senior notes, due 2025 ("2025 Partnership Notes") $ 700.0
$ 700.0
Term loan, due 2022 ("Term Loan") 43.3
43.9
SunCoke's revolving credit facility, due 2022 ("Revolving Facility") —
—
Partnership's revolving credit facility, due 2022 ("Partnership Revolver") 100.0
105.0
5.82 percent financing obligation, due 2021 ("Partnership Financing Obligation") 8.7
10.1
Total borrowings 852.0
859.0
Original issue discount (5.0 ) (5.4 )
Debt issuance costs (13.9 ) (15.2 )
Total debt and financing obligation 833.1
838.4
Less: current portion of long-term debt and financing obligation 5.1
3.9
Total long-term debt and financing obligation $ 828.0
$ 834.5


	June 30, 2020		December 31, 2019

	(Dollars in millions)
7.50 percent senior notes, due 2025 ("2025 Senior Notes")	$	638.0	$	650.0


$400.0 million revolving credit facility, due 2024 ("Revolving Facility")	143.3		143.3


5.82 percent financing obligation, due 2021 ("Financing Obligation")	5.8		7.2
Total borrowings	787.1		800.5
Original issue discount	(3.9)		(4.3)
Debt issuance costs	(12.1)		(13.3)
Total debt and financing obligation	$	771.1	$	782.9
Less: current portion of financing obligation	3.0		2.9
Total long-term debt and financing obligation	$	768.1	$	780.0

During the first quarter of 2020, the Company repurchased $12.0 million face value of outstanding 2025 Senior Notes for $8.9 million of cash payments, resulting in a gain on extinguishment of debt on the Consolidated Statements of Income of $2.9 million, net of the write-off of unamortized debt issuance costs and original issue discount.

~~SunCoke's Revolving Facility has capacity of $100.0 million.~~ As of June 30, ~~2019,~~2020, the Revolving Facility had letters of credit outstanding of ~~$23.8~~$11.8 million and noa $143.3 million outstanding balance, leaving ~~$76.2~~$244.9 million available.

~~Partnership Revolver~~

~~The Partnership Revolver~~ Additionally, the Company has ~~capacity of $285.0 million. As of June 30, 2019, the Partnership had no~~certain letters of credit ~~outstanding and an outstanding balance~~totaling $11.5 million, which do not reduce the Revolving Facility's available balance.

Under the terms of the Revolving Facility, the Company is subject to a maximum consolidated ~~leverage ratio of 3.25:1.00 and a minimum consolidated interest coverage ratio of 2.75:1.00. Under the terms of the Partnership's Revolver, the Partnership is subject to a maximum consolidated~~net leverage ratio of 4.50:1.00 ~~prior to June 30, 2020 and 4.00:1.00 after June 30, 2020~~ and a minimum consolidated interest coverage ratio of 2.50:1.00. The Company's ~~and Partnership's credit~~debt agreements contain other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions including our ability to pay a dividend or repurchase our stock.

If we fail to perform our obligations under these and other covenants, the lenders' credit commitment could be terminated and any outstanding borrowings, together with accrued interest, under the Revolving Facility ~~and Partnership Revolver~~ could be declared immediately due and payable. The Company ~~and the Partnership have~~has a cross default provision that applies to our indebtedness having a principal amount in excess of ~~$35~~$35.0 million.

As of June 30, ~~2019,~~2020, the Company ~~and the Partnership were~~was in compliance with all applicable debt covenants. We do not anticipate a violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing.

8. Commitments and Contingent Liabilities

~~The EPA~~ Between 2005 and 2012, the U.S. Environmental Protection Agency ("EPA") and the Ohio Environmental Protection Agency (“OEPA”) issued Notices of Violations (“NOVs”), alleging violations of air emission operating permits for our Haverhill and Granite City cokemaking ~~facilities which stemmed from alleged violations of our air emission operating permits for these~~ facilities. We worked in a cooperative manner with the EPA, the ~~Ohio Environmental Protection Agency~~OEPA and the Illinois Environmental Protection Agency to address the allegations and, in November 2014, entered into a consent decree with these parties in federal district court in the Southern District of ~~Illinois (the “Court”) with these parties.~~Illinois. The consent decree included a ~~$2.2 million~~ civil penalty ~~payment, which was~~ paid in December 2014, ~~as well as~~and a commitment to undertake capital projects to improve ~~the~~ reliability ~~of the energy recovery systems~~ and enhance environmental performance at the Haverhill and Granite City facilities. In the third quarter of 2018, the Court entered an amendment to the consent decree, which provides the Haverhill and Granite City facilities with additional time to perform necessary maintenance on the flue gas desulfurization systems without exceeding consent decree limits. The emissions associated with this maintenance will be mitigated in accordance with the amendment, and there are no civil penalty payments associated with this amendment performance. The Haverhill project ~~at Haverhill~~ was completed in ~~2016. The project at~~2016, but completion of the Granite City project was ~~due~~delayed to ~~be completed in February 2019, but was instead completed in~~ June 2019, ~~and the Company is in discussions~~with SunCoke agreeing to pay an immaterial amount associated with the ~~government entities regarding, among other things, the timing thereof. We spent $148.9 million related to these environmental projects since work began in 2012.~~delay.

Between 2010 and 2016, SunCoke Energy ~~has~~ also received certain NOVs, Findings of Violations (“FOVs”), and information requests from the EPA, alleging violations of air operating permit conditions related to our Indiana Harbor cokemaking ~~facility, which allege violations~~facility. To reach a settlement of ~~certain air operating permit conditions for this facility. The Clean Air Act (the “CAA”) provides the EPA~~these NOVs and FOVs, we met regularly with the ~~authority to issue, among other actions, an order to enforce a State Implementation Plan (“SIP”) 30 days after an NOV. The CAA also authorizes~~ EPA, enforcement of other non-SIP requirements immediately after an FOV. Generally, an NOV applies to SIPs and requires the EPA to wait 30 days, while an FOV applies to all other provisions (such as federal regulations) of the CAA, and has no waiting period. The NOVs and/or FOVs were received in 2010, 2012, 2013, 2015 and 2016. After discussions with the EPA and the Indiana Department of Environmental Management (“IDEM”) in 2010, resolution of the NOVs/FOVs was postponed by mutual agreement because of ongoing discussions regarding the NOVs at Haverhill and Granite City. In January 2012, the Company began working in a cooperative manner to address the allegations with the EPA, the IDEM and Cokenergy, ~~LLC,~~LLC., an independent power producer ~~that owns and operates an energy facility, including heat recovery equipment and a flue gas desulfurization system,~~ that processes hot flue gas from our Indiana Harbor facility to ~~produce steam and electricity and to~~ reduce the sulfur and particulate content ~~of such flue gas.~~

~~The EPA, IDEM, SunCoke Energy~~ and ~~Cokenergy, LLC met regularly since those discussions commenced to reach a settlement of the NOVs~~produce steam and ~~FOVs. Capital projects were underway during this time to address items that would be included in conjunction with a settlement.~~electricity. A consent decree among the parties was entered by the federal district court in the Northern District of Indiana during the fourth quarter of 2018. The settlement ~~includes~~included a ~~$2.5 million~~ civil penalty ~~that was~~ paid in the fourth quarter of ~~2018. Further, the settlement consists~~2018, and implementation of certain capital projects, ~~already underway~~completed during the fourth quarter of 2019, to improve reliability and environmental performance of the coke ovens at the facility.

The Company is a party to certain other pending and threatened claims, including matters related to commercial ~~and tax~~ disputes, ~~product liability,~~ employment claims, personal injury claims, ~~premises-liability~~common law tort claims ~~allegations of exposures to toxic substances~~ and environmental claims. Although the ultimate outcome of these claims cannot be ascertained at this time, it is reasonably possible that some portion of these claims could be resolved unfavorably to the Company. Management of the Company believes that any liability which may arise from these claims would not have a material adverse impact on our consolidated financial statements.

Black Lung Benefit Liabilities

The Company has obligations related to coal workers’ pneumoconiosis, or black lung, benefits to certain ~~of our~~ former coal miners and their dependents. Such benefits are provided for under Title IV of the Federal Coal Mine and Safety Act of 1969 and subsequent amendments, as well as for black lung benefits provided in the states of Virginia, Kentucky and West Virginia pursuant to workers’ compensation legislation. The Patient Protection and Affordable Care Act (“PPACA”), which was implemented in 2010, amended previous legislation related to coal workers’ black lung obligations. PPACA provides for the automatic extension of awarded lifetime benefits to surviving spouses and changes the legal criteria used to assess and award claims.

We ~~act as a self-insurer for both state and federal black lung benefits and~~ adjust our liability each year based upon actuarial calculations of our expected future payments for these benefits.

Our independent actuarial consultants calculate the present value of the estimated black lung liability annually based on actuarial models utilizing our population of former coal miners, historical payout patterns of both the Company and the industry, actuarial mortality rates, disability incidence, medical costs, death benefits, dependents, discount rates and the current federally mandated payout rates. The estimated liability may be impacted by future changes in the statutory mechanisms, modifications by court decisions and changes in filing patterns driven by perceptions of success by claimants and their advisors, the impact of which cannot be estimated. The estimated liability was ~~$50.9~~$55.9 million and ~~$49.4~~$55.1 million at June 30, ~~2019~~2020 and

December 31, ~~2018,~~2019, respectively, of which the current portion of ~~$4.5~~$4.6 million was included in accrued liabilities on the Consolidated Balance Sheets in both periods.

On February 1, 2013, SunCoke obtained commercial insurance for any black lung liabilities for employees with a last date of employment after that date. Also during 2013, we were reauthorized to continue to self-insure black lung liabilities incurred prior to February 1, 2013 by the U.S. Department of Labor's Division of Coal Mine Workers' Compensation (“DCMWC”) in exchange for $8.4 million of collateral. In July 2019, the DCMWC required that SunCoke, along with a number of other companies, file an application and supporting documentation for reauthorization to self-insure our legacy black lung obligations incurred prior to February 1, 2013. The Company provided the requested information in the fourth quarter of 2019. The DCMWC subsequently notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations; however, the reauthorization is contingent upon the Company providing collateral of $40.4 million to secure certain of its black lung obligations. This proposed collateral requirement is a substantial increase from the $8.4 million in collateral that the Company currently provides to secure these self-insured black lung obligations. The reauthorization process provided the Company with the right to appeal the security determination. SunCoke exercised its right to appeal the DCMWC’s security determination and provided additional information supporting the Company’s position in May 2020. If the Company’s appeal is unsuccessful, the Company may be required to provide additional collateral to receive the self-insurance reauthorization from the DCMWC, which could potentially reduce the Company’s liquidity.

The Company leases land, office space, equipment, railcars and locomotives. Arrangements are assessed at inception to determine if a lease exists and, with the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments. The Company has elected to apply the short-term lease exception for all asset classes, therefore, excluding all leases with a term of less than 12 months from the balance sheet, and will recognize the lease payments in the period they are incurred. Additionally, the Company has elected to account for lease and nonlease components of an arrangement, such as assets and services, as a single lease component for all asset classes.

Certain of our long-term leases include one or more options to renew or to terminate, with renewal terms that can extend the lease term from one month to 50 years. The impact of lease renewals or terminations are included in the expected lease term to the extent the Company is reasonably certain to exercise the renewal or termination. The Company's finance leases are immaterial to our consolidated financial statements.

~~The components of lease expense were as follows:~~

Three months ended June 30, 2019 Six months ended June 30, 2019
(Dollars in millions)
Operating leases:
Cost of products sold and operating expenses $ 0.6
$ 1.0
Selling, general and administrative expenses 0.2
0.3
0.8
1.3
Short-term leases:
Cost of products sold and operating expenses⁽¹⁾⁽²⁾
2.4
4.7
Total lease expense $ 3.2
$ 6.0

~~Total lease expense was $2.4 million and $5.3 million during the three and six months ended June 30, 2018, respectively.~~

~~Supplemental balance sheet information related to leases was as follows:~~

Financial Statement Classification June 30, 2019
(Dollars in millions)
Operating ROU assets Deferred charges and other assets $ 10.3

Operating lease liabilities:
Current operating lease liabilities Accrued liabilities $ 1.8
Noncurrent operating lease liabilities Other deferred credits and liabilities $ 8.0
Total operating lease liabilities $ 9.8

~~The weighted average remaining lease term and weighted average discount rate were as follows:~~



	~~June 30, 2019~~
~~Weighted average remaining lease term of operating leases~~	~~8.3 years~~
~~Weighted average discount rate of operating leases~~	~~5.1~~	%

~~Supplemental cash flow information related to leases was as follows:~~

Six months ended June 30, 2019
(Dollars in millions)
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities $ 2.6
Non-cash activity:
ROU assets obtained in exchange for new operating lease liabilities $ 5.0

~~Maturities of operating lease liabilities as of June 30, 2019 are as follows:~~

(Dollars in millions)
Year ending December 31:
2019⁽¹⁾
$ 1.1
2020 1.9
2021 1.7
2022 1.2
2023 0.9
2024-Thereafter 5.2
Total lease payments 12.0
Less: imputed interest 2.2
Total lease liabilities $ 9.8

~~The aggregate amount of future minimum annual rental payments applicable to noncancelable leases as of December 31, 2018 were as follows:~~

Minimum
Rental
Payments
(Dollars in millions)
Year ending December 31:
2019 $ 2.0
2020 1.1
2021 1.0
2022 0.5
2023 0.1
2024-Thereafter 0.7
Total $ 5.4

~~10.~~ Share-Based Compensation

Equity Classified Awards

During the six months ended June 30, ~~2019,~~2020, the Company granted share-based compensation to eligible participants under the SunCoke Energy, Inc. Long-Term Performance Enhancement Plan (“SunCoke LTPEP”). All awards vest immediately upon a ~~change in control and a~~ qualifying termination of employment, as defined by the SunCoke ~~LTPEP.~~

~~The Company granted the~~LTPEP, following ~~stock options during the six months ended June 30, 2019 with an exercise price equal to the closing price of our common stock on the date of grant.~~

Weighted Average Per Share
Shares Exercise Price Grant Date Fair Value
Traditional stock options 267,897
$ 9.87
$ 4.09

~~The stock options vest~~a change in ~~three equal annual installments beginning one year from the date of grant. The stock options expire ten years from the date of grant.~~

The Company calculates the value of each employee stock option, estimated on the date of grant, using the Black-Scholes option pricing model. The weighted-average fair value of employee stock options granted during the six months ended June 30, 2019 was based on using the following weighted-average assumptions:



	~~Six Months Ended June 30, 2019~~
~~Risk-free interest rate~~	2	%
~~Expected term~~	~~6 years~~
~~Volatility~~	53	%
~~Dividend yield~~	2	%

The risk-free interest rate assumption is based on the U.S. Treasury yield curve at the date of grant for periods which approximate the expected life of the option. The expected term of the employee options represent the average contractual term adjusted by the average vesting period of each option tranche. We determined expected volatility using our historical volatility calculated as our historical daily stock returns over the options' expected term. The dividend yield assumption is based on the Company’s expectation of dividend payouts at the time of grant.control.

Restricted Stock Units Settled in Shares

The Company issued ~~136,425~~304,332 stock-settled restricted stock units (“RSUs”) to certain employees for shares of the Company’s common stock during the six months ended June 30, ~~2019.~~2020. The weighted average grant date fair value was ~~$9.87~~$6.04 per ~~share.~~share and was based on the closing price of our common stock on the day of the grant. The RSUs vest in ~~three~~3 annual installments beginning one year from the date of grant.

Performance Share Units

The Company granted the following performance share units (“PSUs”) for shares of the Company's common stock during the six months ended June 30, ~~2019,~~2020, for which the service period will end on December 31, ~~2021~~2022 and will vest during the first quarter of ~~2022:~~

2023:

Shares Grant Date Fair Value per Share
PSUs⁽¹⁾⁽²⁾
227,378
$ 10.79


	Shares	Grant Date Fair Value per Share
PSUs⁽¹⁾⁽²⁾	228,248	$	6.70

(1) The PSU awards are split 50/50 between the Company's three year cumulative Adjusted EBITDA (as defined in Note 13) performance measure and the Company's three-year average pre-tax return on capital performance measure for its coke and logistics businesses and unallocated corporate expenses.

(2) The number of PSUs ultimately awarded will be determined by the above performance measures versus targets and the Company's three-year total shareholder return (“TSR”) as compared to the TSR of the companies making up the Nasdaq Iron & Steel Index (“TSR Modifier”). The TSR Modifier can impact the payout between 75 percent and 125 percent of the Company's final performance measure results.

The award may vest between ~~zero~~0 and 250 percent of the original units granted. The fair value of the PSUs granted during the six months ended June 30, ~~2019~~2020 is based on the closing price of our common stock on the date of grant as well as a Monte Carlo simulation for the valuation of the TSR Modifier.

The Company did 0t grant any stock options during the six months ended June 30, 2020.

Liability Classified Awards

Restricted Stock Units Settled in Cash

During the six months ended June 30, ~~2019,~~2020, the Company issued ~~147,077~~263,998 restricted stock units to be settled in cash (“Cash RSUs”), which vest in ~~three~~3 annual installments beginning one year from the grant date. The weighted average grant date fair value of the Cash RSUs granted during the six months ended June 30, ~~2019~~2020 was ~~$9.68~~$6.04 per unit and was based on the closing price of our common stock on the day of grant.

The Cash RSU liability is adjusted based on the closing price of our common stock at the end of each quarterly period and at both June 30, ~~2019~~2020 and December 31, ~~2018~~2019 was not material.

Cash Incentive Award

The Company also granted share-based compensation to eligible participants under the SunCoke Energy, Inc. Long-Term Cash Incentive Plan (“SunCoke LTCIP”), which became effective January 1, 2016. The SunCoke LTCIP is designed to provide for performance-based, cash-settled awards. All awards vest immediately upon a ~~change in control and a~~ qualifying termination of employment, as defined by the SunCoke ~~LTCIP.~~LTCIP, following a change in control.

The Company issued a grant date fair value award of ~~$0.6~~$2.0 million during the six months ended June 30, ~~2019,~~2020, for which the service period will end on December 31, ~~2021~~2022 and will vest during the first quarter of ~~2022.~~2023. The awards are split 50/50 between the Company's ~~three-year~~three-year cumulative Adjusted EBITDA performance and the Company's ~~three-year~~three-year average pre-tax return on capital for its coke and logistics businesses and unallocated corporate expenses. The ~~ultimate award value will be determined by the performance versus targets and~~2020 awards are not subject to the Company's ~~three-year~~three-year TSR Modifier ~~performance but will be capped at 250 percent of the target award.~~performance.

The cash incentive award liability at June 30, ~~2019~~2020 was adjusted based on the Company's ~~three-year~~three-year cumulative Adjusted EBITDA performance and adjusted average pre-tax return on capital for the Company's coke and logistics businesses and unallocated corporate expenses. The cash incentive award liability at both June 30, ~~2019~~2020 and December 31, ~~2018~~2019 was not material.

Summary of Share-Based Compensation Expense

Below is a summary of the compensation expense, unrecognized compensation costs, and the period for which the unrecognized compensation cost is expected to be recognized over:

Compensation Expense⁽¹⁾

(1) Compensation expense recognized by the Company is included in selling, general and administrative expenses on the Consolidated Statements of Income.

The Company issued $0.1 million and $0.2 million of share-based compensation to the Company's Board of Directors during ~~both~~ the six months ended June 30, 2020 and 2019, ~~and 2018.~~respectively.

10. Earnings per Share

Basic earnings per share (“EPS”) has been computed by dividing net income attributable to SunCoke Energy, Inc. by the weighted average number of shares outstanding during the period. Except where the result would be anti-dilutive, diluted earnings per share has been computed to give effect to share-based compensation awards using the treasury stock method.

The following table sets forth the reconciliation of the weighted-average number of common shares used to compute basic EPS to those used to compute diluted EPS:

Weighted-average number of common shares outstanding-basic⁽¹⁾

The following table shows ~~stock options and performance stock units~~equity awards that are excluded from the computation of diluted earnings per share as the shares would have been anti-dilutive:

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018

(Shares in millions)
Stock options 3.0
2.8
2.9
2.8
Performance stock units 0.2
—
0.2
0.1
Total 3.2
2.8
3.1
2.9


	Three Months Ended June 30,			Six Months Ended June 30,
	2020	2019	2020	2019

	(Shares in millions)
Stock options	3.1	3.0	3.1	2.9
Restricted stock units	0.3	—	0.3	—
Performance stock units	0.2	0.2	0.2	0.2
Total	3.6	3.2	3.6	3.1

11. Fair Value Measurement

The Company measures certain financial and non-financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:

•Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.

•Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.

•Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Certain assets and liabilities are measured at fair value on a recurring basis. The Company's cash ~~equivalents, which amounted to $5.5 million~~ and ~~$3.2 million at June 30, 2019 and December 31, 2018, respectively,~~cash equivalents were measured at fair value at June 30, 2020 and December 31, 2019 based on quoted prices in active markets for identical assets. These inputs are classified as Level 1 within the valuation hierarchy.

~~CMT Contingent Consideration~~

In connection with the acquisition of CMT in 2015, the Company entered into a contingent consideration arrangement that runs through 2022 and requires the Company to make future payments to The Cline Group based on future volume over a specified threshold, price and contract renewals. The fair value of the contingent consideration was estimated based on a probability-weighted analysis using significant inputs that are not observable in the market, or Level 3 inputs. Key assumptions included probability adjusted levels of handling services provided by CMT, anticipated price per ton on future sales and probability of contract renewal, including length of future contracts, volume commitment, and anticipated price per ton. The fair value of the contingent consideration was $3.8 million and $5.0 million at June 30, 2019 and December 31, 2018, respectively, and was primarily included in other deferred credits and liabilities on the Consolidated Balance Sheets. The decrease in the contingent consideration liability during 2019 was the result of a $0.9 million payment made in the first quarter as well as a decrease in expected future payments based on changes in expected throughput volumes related to the long-term, take-or-pay agreements.

Certain Financial Assets and Liabilities not Measured at Fair Value

At June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the fair value of the Company’s total debt was estimated to be ~~$835.6~~$689.9 million and ~~$822.8~~$776.1 million, respectively, compared to a carrying amount of ~~$852.0~~$787.1 million and ~~$859.0~~$800.5 million, respectively. The fair value was estimated by management based upon estimates of debt pricing provided by financial institutions, which are considered Level 2 inputs.

~~13.~~12. Revenue from Contracts with Customers

Substantially all our coke sales are made pursuant to long-term, take-or-pay coke sales agreements with AM USA, AK Steel and U.S. Steel, who are three of the largest blast furnace steelmakers in North America. The take-or-pay provisions in our agreements require our customers to purchase all or substantially all of the coke volumes produced as specified in the agreements or pay the contract price for any tonnage they do not purchase. The take-or-pay provisions of our agreements also require us to deliver minimum annual tonnage, which vary by contract, and have historically been approximately 4.1 million tons, covering at least 90 percent of each facility's nameplate capacity.

As a result of the impacts the COVID-19 global pandemic has had on our customers, in July 2020, SunCoke entered into customer agreement amendments, providing near-term coke supply relief for our customers, in exchange for extending certain agreements These amended agreements reduced the minimum tonnage we are required to deliver to our customers to approximately 3.8 million tons, 3.7 million tons and 3.3 million tons in 2020, 2021 and 2022 through contract expiration, respectively. These amended coke sales agreements have an average remaining term of approximately six years.

Disaggregated Sales and Other Operating Revenue

The following table provides disaggregated sales and other operating revenue by product or service, excluding intersegment revenues:

The following table provides disaggregated sales and other operating revenue by customer:

~~Logistics Contract Balances~~Table of Contents

Our logistics business has long-term, take-or-pay agreements requiring us to handle over 13 million tons annually. The take-or-pay provisions in these agreements require our customers to purchase such handling services or pay the contract price for services they elect not to take. Estimated take-or-pay revenue of approximately $283 million from all of our long-term logistics contracts is expected to be recognized over the next five years for unsatisfied or partially unsatisfied performance obligations as of June 30, 2019.

~~The following table provides changes in the Company's deferred revenue:~~

Six Months Ended June 30,
2019 2018
(Dollars in millions)
Beginning balance at December 31, 2018 and 2017, respectively $ 3.0
$ 1.7
Reclassification of the beginning contract liabilities to revenue, as a result of performance obligation satisfied (1.0 ) (0.6 )
Billings in excess of services performed, not recognized as revenue⁽¹⁾
11.5
2.1
Ending balance at June 30, 2019 and 2018, respectively $ 13.5
$ 3.2


~~(1)~~	~~Primarily relates to performance obligations that expire on December 31, 2019, at which time the deferred revenues will be recognized as revenues on the Consolidated Statements of Income.~~

~~14.~~13. Business Segment Information

The Company reports its business through ~~three~~3 segments: Domestic Coke, Brazil Coke and Logistics. The Domestic Coke segment includes the Jewell, Indiana Harbor, Haverhill, Granite City and Middletown cokemaking facilities. Each of these facilities produces coke, and all facilities except Jewell recover waste heat, which is converted to steam or electricity.

The Brazil Coke segment includes the licensing and operating fees payable to us under long-term contracts with ArcelorMittal Brazil, under which we operate a cokemaking facility located in Vitória, Brazil through at least 2023.

Logistics operations are comprised of CMT, KRT, Lake Terminal, which provides services to our Indiana Harbor cokemaking facility, and DRT, which provides services to our Jewell cokemaking facility. Handling and mixing results are presented in the Logistics segment.

Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other. Corporate and Other also includes activity from our legacy coal mining business.

Segment assets are those assets utilized within a specific segment and exclude taxes.

The following table includes Adjusted EBITDA, which is the measure of segment profit or loss reported to the chief operating decision maker for purposes of allocating resources to the segments and assessing their performance:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019

	(Dollars in millions)
Sales and other operating revenue:
Domestic Coke	$	323.5	$	378.0	$	688.7	$	737.3
Brazil Coke	7.2		10.0		15.7		19.7
Logistics	7.3		19.5		16.3		41.8
Logistics intersegment sales	5.2		6.7		11.8		13.2
Elimination of intersegment sales	(5.2)		(6.7)		(11.8)		(13.2)
Total sales and other operating revenues	$	338.0	$	407.5	$	720.7	$	798.8

Adjusted EBITDA:
Domestic Coke	$	61.6	$	56.3	$	125.0	$	114.8
Brazil Coke	3.2		4.3		7.3		8.8
Logistics	3.0		11.8		6.3		24.5
Corporate and Other⁽¹⁾	(8.8)		(9.3)		(17.5)		(17.7)
Total Adjusted EBITDA	$	59.0	$	63.1	$	121.1	$	130.4

Depreciation and amortization expense:
Domestic Coke	$	30.4	$	30.6	$	60.9	$	61.2
Brazil Coke	0.1		0.1		0.2		0.3
Logistics	3.2		6.0		6.4		12.1
Corporate and Other	0.4		0.3		0.7		0.6
Total depreciation and amortization expense	$	34.1	$	37.0	$	68.2	$	74.2

Capital expenditures:
Domestic Coke	$	11.5	$	31.5	$	32.3	$	50.4
Logistics	2.6		0.7		4.6		2.7

Total capital expenditures	$	14.1	$	32.2	$	36.9	$	53.1

(1) Corporate and Other includes activity from our legacy coal mining business, which contributed Adjusted EBITDA losses of $2.4 million and $4.5 million during the three and six months ended June 30, 2020, respectively, as well as $2.0 million and $3.8 million during the three and six months ended June 30, 2019, respectively. Additionally, Corporate and Other includes foundry related research and development costs of $0.6 million and $1.4 million during the three and six months ended June 30, 2020, respectively.

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018

(Dollars in millions)
Sales and other operating revenue:
Domestic Coke $ 378.0
$ 328.7
$ 737.3
$ 646.8
Brazil Coke 10.0
10.2
19.7
20.3
Logistics 19.5
28.1
41.8
50.4
Logistics intersegment sales
6.7

5.5

13.2

10.9
Elimination of intersegment sales (6.7 )
(5.5 )
(13.2 )
(10.9 )
Total sales and other operating revenues $ 407.5
$ 367.0
$ 798.8
$ 717.5

Adjusted EBITDA:
Domestic Coke $ 56.3
$ 52.9
$ 114.8
$ 107.2
Brazil Coke 4.3
4.8
8.8
9.5
Logistics 11.8
19.7
24.5
33.3
Corporate and Other⁽¹⁾
(9.3 ) (10.1 ) (17.7 ) (18.7 )
Total Adjusted EBITDA $ 63.1
$ 67.3
$ 130.4
$ 131.3

Depreciation and amortization expense:
Domestic Coke $ 30.6
$ 25.5
$ 61.2
$ 50.8
Brazil Coke 0.1
0.1
0.3
0.3
Logistics 6.0
6.0
12.1
13.0
Corporate and Other 0.3
0.4
0.6
0.8
Total depreciation and amortization expense $ 37.0
$ 32.0
$ 74.2
$ 64.9

Capital expenditures:
Domestic Coke $ 31.5
$ 26.8
$ 50.4
$ 41.9
Logistics 0.7
1.3
2.7
1.6
Corporate and Other —
0.1
—
0.1
Total capital expenditures $ 32.2
$ 28.2
$ 53.1
$ 43.6


~~(1)~~	~~Corporate and Other includes the activity from our legacy coal mining business, which contributed Adjusted EBITDA losses of $2.0 million and $3.8 million during the~~ ~~three and six months ended June 30, 2019, respectively, as well as $2.4 million and $4.7 million during the three and six months ended June 30, 2018, respectively.~~ Table of Contents

The following table sets forth the Company's segment assets:

June 30, 2019 December 31, 2018

(Dollars in millions)
Segment assets
Domestic Coke $ 1,505.5
$ 1,446.5
Brazil Coke 15.4
15.1
Logistics 468.3
463.0
Corporate and Other 90.0
120.0
Segment assets, excluding tax assets 2,079.2
2,044.6
Tax assets 3.2
0.7
Total assets $ 2,082.4
$ 2,045.3


	June 30, 2020		December 31, 2019

	(Dollars in millions)
Segment assets
Domestic Coke	$	1,378.9	$	1,434.2
Brazil Coke	11.8		14.6
Logistics	197.9		200.8
Corporate and Other	83.7		102.0
Segment assets, excluding tax assets	1,672.3		1,751.6
Tax assets	6.1		2.2
Total assets	$	1,678.4	$	1,753.8

The Company evaluates the performance of its segments based on segment Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for any impairments, ~~loss~~gain on extinguishment of debt, changes to our contingent consideration liability related to our acquisition of CMT, ~~loss on the disposal of our interest in VISA SunCoke,~~ and/or transaction costs incurred as part of the Simplification Transaction. EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses.

Management believes Adjusted EBITDA is an important measure in assessing operating performance. Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income or any other measure of financial performance presented in accordance with GAAP. Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Table of Contents

Below is a reconciliation of Adjusted EBITDA to net income, which is its most directly comparable financial measure calculated and presented in accordance with GAAP:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(Dollars in millions)
Net income attributable to SunCoke Energy, Inc.	$	6.5	$	2.3	$	11.4	$	12.1
Add: Net income attributable to noncontrolling interests	1.3		1.0		2.3		3.4
Net income	$	7.8	$	3.3	$	13.7	$	15.5
Add:
Depreciation and amortization expense	34.1		37.0		68.2		74.2
Interest expense, net	14.9		15.1		29.5		29.9
Gain on extinguishment of debt	—		—		(2.9)		—
Income tax expense	2.2		3.2		12.6		6.2
Contingent consideration adjustments⁽¹⁾	—		0.1		—		(0.3)

Simplification Transaction costs⁽²⁾	—		4.4		—		4.9
Adjusted EBITDA	$	59.0	$	63.1	$	121.1	$	130.4
Subtract: Adjusted EBITDA attributable to noncontrolling interests⁽³⁾	2.3		18.6		4.3		37.5
Adjusted EBITDA attributable to SunCoke Energy, Inc.	$	56.7	$	44.5	$	116.8	$	92.9

(1)

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(Dollars in millions)
Net income $ 3.3
$ 11.4
$ 15.5
$ 24.4
Add:
Depreciation and amortization expense $ 37.0
$ 32.0
$ 74.2
$ 64.9
Interest expense, net 15.1
15.7
29.9
31.5
Loss on extinguishment of debt —
—
—
0.3
Income tax expense 3.2
2.2
6.2
4.2
Contingent consideration adjustments⁽¹⁾
0.1
0.6
(0.3 ) 0.6
Loss from equity method investment —
5.4
—
5.4
Simplification Transaction costs⁽²⁾
4.4
—
4.9
—
Adjusted EBITDA $ 63.1
$ 67.3
$ 130.4
$ 131.3
Subtract: Adjusted EBITDA attributable to noncontrolling interests⁽³⁾
18.6
21.6
37.5
40.6
Adjusted EBITDA attributable to SunCoke Energy, Inc. $ 44.5
$ 45.7
$ 92.9
$ 90.7

In connection with the CMT acquisition, the Company entered into a contingent consideration arrangement that required the Company to make future payments to the seller based on future volume over a specified threshold, price and contract renewals. Contingent consideration adjustments in the first half of 2019 were primarily the result of modifications to the volume forecast. This liability was written to 0 during the third quarter of 2019, and the related contract was terminated in 2020.


~~(1)~~	~~See Note 12.~~


~~(2)~~	~~Costs expensed by the Partnership associated with the Simplification Transaction.~~


~~(3)~~	(2)Costs expensed by the Partnership associated with the Simplification Transaction. (3)Reflects noncontrolling interest in Indiana Harbor and the portion ~~of the Partnership owned by public unitholders prior to the closing of the Simplification Transaction.~~

~~15. Supplemental Condensed Consolidating Financial Information~~

~~Certain~~ ~~100 percent~~ owned subsidiaries of the Company serve as guarantors of the obligations under the Credit Agreement (“Guarantor Subsidiaries”). These guarantees are full and unconditional (subject, in the case of the Guarantor Subsidiaries, to customary release provisions as described below) and joint and several. For purposes of the following information, SunCoke Energy is referred to as “Issuer.” The indenture dated ~~May 24, 2017~~ among the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., governs subsidiaries designated as “Guarantor Subsidiaries.” All other consolidated subsidiaries of the Company are collectively referred to as “Non-Guarantor Subsidiaries.”

~~The ability~~ of the Partnership ~~and Indiana Harbor to pay dividends and make loans~~owned by public unitholders prior to the ~~Company is restricted under the partnership agreements~~Simplification Transaction.

Table of the Partnership and Indiana Harbor, respectively. The Credit Agreement governing the Partnership’s credit facility and the indenture governing the Partnership Notes contain customary provisions which would potentially restrict the Partnership’s ability to make distributions or loans to the Company under certain circumstances. For the year ended December 31, 2018, less than 25 percent of net assets were restricted. Additionally, certain coal mining entities are designated as unrestricted subsidiaries. As such, all the subsidiaries described above are presented as “Non-Guarantor Subsidiaries.” There have been no changes to the “Guarantor Subsidiaries” and “Non-Guarantor Subsidiaries” during 2019.

~~The guarantee of a Guarantor Subsidiary will terminate upon:~~

~~a sale or other disposition of the Guarantor Subsidiary or of all or substantially all of its assets;~~

a sale of the majority of the Capital Stock of a Guarantor Subsidiary to a third-party, after which the Guarantor Subsidiary is no longer a “Restricted Subsidiary” in accordance with the indenture governing the Notes;

~~the liquidation or dissolution of a Guarantor Subsidiary so long as no “Default” or "Event of Default”, as defined under the indenture governing the Notes, has occurred as a result thereof;~~

~~the designation of a Guarantor Subsidiary as an “unrestricted subsidiary” in accordance with the indenture governing the Notes;~~

~~the requirements for defeasance or discharge of the indentures governing the Notes having been satisfied; or~~

the release, other than the discharge through payments by a Guarantor Subsidiary, from its guarantee under the Credit Agreement or other indebtedness that resulted in the obligation of the Guarantor Subsidiary under the indenture governing the Notes.

The following supplemental condensed combining and consolidating financial information reflects the Issuer’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Non-Guarantor Subsidiaries, the combining and consolidating adjustments and eliminations and the Issuer’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed combining and consolidating information, the Issuer’s investments in its subsidiaries and the Guarantor and Non-Guarantor Subsidiaries’ investments in its subsidiaries are accounted for under the equity method of accounting.

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Statement of Income~~

~~Three Months Ended June 30, 2019~~

~~(Dollars in millions)~~

Contents

Issuer
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Combining
and
Consolidating
Adjustments
Total
Revenues
Sales and other operating revenue $ —
$ 62.0
$ 346.7
$ (1.2 ) $ 407.5
Equity in earnings of subsidiaries 4.5
56.6
—
(61.1 ) —
Total revenues, net of equity earnings of subsidiaries 4.5
118.6
346.7
(62.3 ) 407.5
Costs and operating expenses
Cost of products sold and operating expense —
45.6
282.6
(1.2 ) 327.0
Selling, general and administrative expense 2.5
4.1
15.3
—
21.9
Depreciation and amortization expense —
2.2
34.8
—
37.0
Total costs and operating expenses 2.5
51.9
332.7
(1.2 ) 385.9
Operating income 2.0
66.7
14.0
(61.1 ) 21.6
Interest (income) expense, net - affiliate —
(0.6 ) 0.6
—
—
Interest expense (income), net 0.8
(0.5 ) 14.8
—
15.1
Total interest expense (income), net
0.8

(1.1 )
15.4

—
15.1
Income (loss) before income tax (benefit) expense 1.2

67.8

(1.4 )
(61.1 ) 6.5
Income tax (benefit) expense (1.1 ) 61.8
(57.5 ) —
3.2
Net income 2.3

6.0

56.1

(61.1 )
3.3
Less: Net income attributable to noncontrolling interests —
—
1.0
—
1.0
Net income attributable to SunCoke Energy, Inc. $ 2.3
$ 6.0
$ 55.1
$ (61.1 ) $ 2.3
Comprehensive income $ 2.4
$ 6.0
$ 56.3
$ (61.3 ) $ 3.4
Less: Comprehensive income attributable to noncontrolling interests —
—
1.0
—
1.0
Comprehensive income attributable to SunCoke Energy, Inc. $ 2.4
$ 6.0
$ 55.3
$ (61.3 ) $ 2.4

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Statement of Income~~

~~Three Months Ended June 30, 2018~~

~~(Dollars in millions)~~

Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Combining
and
Consolidating
Adjustments Total
Revenues
Sales and other operating revenue $ —
$ 56.7
$ 311.5
$ (1.2 ) $ 367.0
Equity in earnings of subsidiaries 7.1
9.2
—
(16.3 ) —
Total revenues, net of equity in earnings of subsidiaries 7.1
65.9
311.5
(17.5 ) 367.0
Costs and operating expenses
Cost of products sold and operating expenses —
43.8
240.1
(1.2 ) 282.7
Selling, general and administrative expenses 2.6
3.3
11.7
—
17.6
Depreciation and amortization expense
—
2.0
30.0
—
32.0
Total costs and operating expenses 2.6

49.1

281.8

(1.2 )
332.3
Operating income 4.5
16.8
29.7
(16.3 ) 34.7
Interest (income) expense, net - affiliate —
(2.1 ) 2.1
—
—
Interest expense (income), net 0.8
(0.2 ) 15.1
—
15.7
Total interest expense (income), net
0.8

(2.3 )
17.2

—
15.7
Income before income tax (benefit) expense 3.7

19.1

12.5

(16.3 )
19.0
Income tax (benefit) expense (0.4 ) 3.1
(0.5 ) —
2.2
Loss from equity method investment —
—
5.4
—
5.4
Net income 4.1

16.0

7.6

(16.3 )
11.4
Less: Net income attributable to noncontrolling interests —
—
7.2
—
7.2
Net income attributable to SunCoke Energy, Inc. $ 4.1
$ 16.0
$ 0.4
$ (16.3 ) $ 4.2
Comprehensive income $ 12.0
$ 16.0
$ 15.4
$ (24.2 ) $ 19.2
Less: Comprehensive income attributable to noncontrolling interests —
—
7.2
—
7.2
Comprehensive income attributable to SunCoke Energy, Inc. $ 12.0
$ 16.0
$ 8.2
$ (24.2 ) $ 12.0

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Statement of Income~~

~~Six Months Ended June 30, 2019~~

~~(Dollars in millions)~~

Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Combining
and
Consolidating
Adjustments Total
Revenues
Sales and other operating revenue $ —
$ 124.3
$ 677.0
$ (2.5 ) $ 798.8
Equity in earnings of subsidiaries 16.4
62.9
—
(79.3 ) —
Total revenues, net of equity in earnings of subsidiaries 16.4
187.2
677.0
(81.8 ) 798.8
Costs and operating expenses
Cost of products sold and operating expense —
91.2
545.7
(2.5 ) 634.4
Selling, general and administrative expense 4.6
7.5
26.5
—
38.6
Depreciation and amortization expense
—
4.2
70.0
—
74.2
Total costs and operating expenses 4.6
102.9
642.2
(2.5 ) 747.2
Operating income 11.8
84.3
34.8
(79.3 ) 51.6
Interest (income) expense, net - affiliate —
(1.0 ) 1.0
—
—
Interest expense (income), net 1.6
(1.1 ) 29.4
—
29.9
Total interest expense (income), net
1.6
(2.1 ) 30.4
—
29.9
Income before income tax (benefit) expense 10.2
86.4
4.4
(79.3 ) 21.7
Income tax (benefit) expense (1.9 ) 66.8
(58.7 ) —
6.2
Net income 12.1
19.6
63.1
(79.3 ) 15.5
Less: Net income attributable to noncontrolling interests —
—
3.4
—
3.4
Net income attributable to SunCoke Energy, Inc. $ 12.1
$ 19.6
$ 59.7
$ (79.3 ) $ 12.1
Comprehensive income $ 12.2
$ 19.5
$ 63.3
$ (79.4 ) $ 15.6
Less: Comprehensive income attributable to noncontrolling interests —
—
3.4
—
3.4
Comprehensive income attributable to SunCoke Energy, Inc. $ 12.2
$ 19.5
$ 59.9
$ (79.4 ) $ 12.2

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Statement of Income~~

~~Six Months Ended June 30, 2018~~

~~(Dollars in millions)~~

Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Combining
and
Consolidating
Adjustments Total
Revenues
Sales and other operating revenue $ —
$ 107.7
$ 612.2
$ (2.4 ) $ 717.5
Equity in earnings of subsidiaries 18.0
17.9
—
(35.9 ) —
Total revenues, net of equity in earnings of subsidiaries of subsidiaries 18.0
125.6
612.2
(38.3 ) 717.5
Costs and operating expenses
Cost of products sold and operating expense —
82.9
472.8
(2.4 ) 553.3
Selling, general and administrative expense 4.0
6.7
22.8
—
33.5
Depreciation and amortization expense —
4.0
60.9
—
64.9
Total costs and operating expenses 4.0
93.6
556.5
(2.4 ) 651.7
Operating income 14.0
32.0
55.7
(35.9 ) 65.8
Interest (income) expense, net - affiliate —
(4.1 ) 4.1
—
—
Interest expense (income), net 1.5
(0.4 ) 30.4
—
31.5
Total interest expense (income), net
1.5
(4.5 ) 34.5
—
31.5
Loss on extinguishment of debt 0.3
—
—
—
0.3
Income before income tax (benefit) expense 12.2
36.5
21.2
(35.9 ) 34.0
Income tax (benefit) expense (0.6 ) 6.2
(1.4 ) —
4.2
Loss from equity method investment —
—
5.4
—
5.4
Net income 12.8
30.3
17.2
(35.9 ) 24.4
Less: Net income attributable to noncontrolling interests —
—
11.5
—
11.5
Net income attributable to SunCoke Energy, Inc. $ 12.8
$ 30.3
$ 5.7
$ (35.9 ) $ 12.9
Comprehensive income $ 20.6
$ 30.3
$ 24.9
$ (43.7 ) $ 32.1
Less: Comprehensive income attributable to noncontrolling interests —
—
11.5
—
11.5
Comprehensive income attributable to SunCoke Energy, Inc. $ 20.6
$ 30.3
$ 13.4
$ (43.7 ) $ 20.6

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Balance Sheet~~

~~June 30, 2019~~

~~(Dollars in millions, except per share amounts)~~

Issuer
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Combining
and
Consolidating
Adjustments
Total
Assets
Cash and cash equivalents $ 0.3
$ 89.3
$ 12.6
$ —
$ 102.2
Receivables —
13.6
85.3
—
98.9
Inventories —
13.8
161.9
—
175.7
Income tax receivable —
—
100.2
(97.0 ) 3.2
Other current assets —
4.4
0.5
—
4.9
Advances to affiliate —
276.1
—
(276.1 ) —
Total current assets 0.3
397.2
360.5
(373.1 ) 384.9
Notes receivable from affiliate —
—
200.0
(200.0 ) —
Properties, plants and equipment, net —
52.4
1,402.4
—
1,454.8
Goodwill —
3.4
73.5
—
76.9
Other intangible assets, net —
0.7
150.7
—
151.4
Deferred income taxes 8.1
—
—
(8.1 ) —
Deferred charges and other assets —
5.1
9.3
—
14.4
Total assets $ 8.4
$ 458.8
$ 2,196.4
$ (581.2 ) $ 2,082.4
Liabilities and Equity
Advances from affiliate $ 130.3
$ —
$ 145.8
$ (276.1 ) —
Accounts payable —
18.1
119.1
—
137.2
Accrued liabilities 1.2
13.0
35.7
—
49.9
Deferred revenue —
—
13.5
—
13.5
Current portion of long-term debt and financing obligation 2.3
—
2.8
—
5.1
Interest payable 0.4
—
3.5
—
3.9
Income taxes payable 0.7
96.3
—
(97.0 ) —
Total current liabilities 134.9

127.4

320.4

(373.1 ) 209.6
Long-term debt and financing obligation 39.8
—
788.2
—
828.0
Payable to affiliate —
200.0
—
(200.0 ) —
Accrual for black lung benefits —
11.2
35.2
—
46.4
Retirement benefit liabilities —
11.6
12.5
—
24.1
Deferred income taxes —
211.8
9.1
(8.1 ) 212.8
Asset retirement obligations —
—
13.4
—
13.4
Other deferred credits and liabilities 3.8
8.0
13.5
—
25.3
Total liabilities 178.5

570.0

1,192.3

(581.2 ) 1,359.6
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued shares at June 30, 2019 —
—
—
—
—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 98,036,174 shares at June 30, 2019 1.0
—
—
—
1.0
Treasury stock, 7,477,657 shares at June 30, 2019 (140.7 ) —
—
—
(140.7 )
Additional paid-in capital 709.7
201.8
804.8
(1,006.6 ) 709.7
Accumulated other comprehensive loss (13.0 ) (2.1 ) (10.9 ) 13.0
(13.0 )
Retained earnings 139.6
545.7
183.9
(729.7 ) 139.5
Equity investment eliminations (866.7 ) (856.6 ) —
1,723.3
—
Total SunCoke Energy, Inc. stockholders’ equity (170.1 ) (111.2 ) 977.8
—
696.5
Noncontrolling interests —
—
26.3
—
26.3
Total equity (170.1 ) (111.2 ) 1,004.1
—
722.8
Total liabilities and equity $ 8.4
$ 458.8
$ 2,196.4
$ (581.2 ) $ 2,082.4

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Balance Sheet~~

~~December 31, 2018~~

~~(Dollars in millions, except per share amounts)~~

Issuer
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Combining
and
Consolidating
Adjustments
Total
Assets
Cash and cash equivalents $ —
$ 123.2
$ 22.5
$ —
$ 145.7
Receivables —
13.3
62.1
—
75.4
Inventories —
10.6
99.8
—
110.4
Income tax receivable —
—
96.1
(95.4 ) 0.7
Other current assets —
1.8
1.0
—
2.8
Advances to affiliate —
281.1
—
(281.1 ) —
Total current assets —
430.0
281.5
(376.5 ) 335.0
Notes receivable from affiliate —
—
200.0
(200.0 ) —
Properties, plants and equipment, net —
54.3
1,416.8
—
1,471.1
Goodwill —
3.4
73.5
—
76.9
Other intangible assets, net —
1.1
155.7
—
156.8
Deferred income taxes 7.0
—
—
(7.0 ) —
Deferred charges and other assets —
5.1
0.4
—
5.5
Total assets $ 7.0
$ 493.9
$ 2,127.9
$ (583.5 ) $ 2,045.3
Liabilities and Equity

Advances from affiliate $ 167.3
$ —
$ 113.8
$ (281.1 ) $ —
Accounts payable —
14.7
100.3
—
115.0
Accrued liabilities 1.8
13.7
30.1
—
45.6
Deferred revenue —
—
3.0
—
3.0
Current portion of long-term debt and financing obligation 1.1
—
2.8
—
3.9
Interest payable 0.4
—
3.2
—
3.6
Income taxes payable 1.9
93.5
—
(95.4 ) —
Total current liabilities 172.5

121.9

253.2

(376.5 ) 171.1
Long-term debt and financing obligation 41.2
—
793.3
—
834.5
Payable to affiliate —
200.0
—
(200.0 ) —
Accrual for black lung benefits —
10.9
34.0
—
44.9
Retirement benefit liabilities —
12.2
13.0
—
25.2
Deferred income taxes —
194.9
66.8
(7.0 ) 254.7
Asset retirement obligations —
—
14.6
—
14.6
Other deferred credits and liabilities 3.5
6.6
7.5
—
17.6
Total liabilities 217.2

546.5

1,182.4

(583.5 ) 1,362.6
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued and outstanding shares at December 31, 2018 —
—
—
—
—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 72,223,750 shares at December 31, 2018 0.7
—
—
—
0.7
Treasury Stock, 7,477,657 shares at December 31, 2018 (140.7 ) —
—
—
(140.7 )
Additional paid-in capital 488.9
61.0
612.8
(673.9 ) 488.8
Accumulated other comprehensive loss (13.1 ) (2.0 ) (11.1 ) 13.1
(13.1 )
Retained earnings 127.5
526.1
124.2
(650.4 ) 127.4
Equity investment eliminations (673.5 ) (637.7 ) —
1,311.2
—
Total SunCoke Energy, Inc. stockholders’ equity (210.2 ) (52.6 ) 725.9
—
463.1
Noncontrolling interests —
—
219.6
—
219.6
Total equity (210.2 ) (52.6 ) 945.5
—
682.7
Total liabilities and equity $ 7.0
$ 493.9
$ 2,127.9
$ (583.5 ) $ 2,045.3

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Statement of Cash Flows~~

~~Six Months Ended June 30, 2019~~

~~(Dollars in millions)~~

Issuer
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Combining
and
Consolidating
Adjustments
Total
Cash Flows from Operating Activities:
Net income $ 12.1
$ 19.6
$ 63.1
$ (79.3 ) $ 15.5
Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization expense —
4.2
70.0
—
74.2
Deferred income tax (benefit) expense (1.1 ) 16.9
(14.0 ) —
1.8
Payments in excess of expense for postretirement plan benefits —
(0.6 ) (0.5 ) —
(1.1 )
Share-based compensation expense 2.1
—
—
—
2.1
Equity in loss of subsidiaries
(16.4 ) (62.9 ) —
79.3
—
Changes in working capital pertaining to operating activities:
Receivables —
(0.3 ) (23.2 ) —
(23.5 )
Inventories —
(3.2 ) (62.1 ) —
(65.3 )
Accounts payable —
4.1
18.9
—
23.0
Accrued liabilities (0.6 ) (1.5 ) 2.3
—
0.2
Deferred revenue —
—
10.5
—
10.5
Interest payable —
—
0.3
—
0.3
Income taxes (1.2 ) 2.8
(4.1 ) —
(2.5 )
Other (1.6 ) (0.5 ) 2.5

0.4
Net cash (used in) provided by operating activities (6.7 ) (21.4 ) 63.7
—
35.6
Cash Flows from Investing Activities:

Capital expenditures —
(2.3 ) (50.8 ) —
(53.1 )
Other investing activities —
—
0.2
—
0.2
Net cash used in investing activities —

(2.3 )
(50.6 )
—
(52.9 )
Cash Flows from Financing Activities:

Repayment of long-term debt (0.6 ) —
—
—
(0.6 )
Proceeds from revolving facility
—
—
175.6
—
175.6
Repayment of revolving facility —
—
(180.6 ) —
(180.6 )
Repayment of financing obligation —
—
(1.4 ) —
(1.4 )
Cash distribution to noncontrolling interests —
—
(14.2 ) —
(14.2 )
Other financing activities (1.7 ) —
(3.3 ) —
(5.0 )
Net increase (decrease) in advances from affiliates 9.3
(10.2 ) 0.9
—
—
Net cash provided by (used in) financing activities 7.0
(10.2 ) (23.0 ) —
(26.2 )
Net increase (decrease) in cash and cash equivalents 0.3

(33.9 )
(9.9 )
—
(43.5 )
Cash and cash equivalents at beginning of period —
123.2
22.5
—
145.7
Cash and cash equivalents at end of period $ 0.3
$ 89.3
$ 12.6
$ —
$ 102.2

~~SunCoke Energy, Inc.~~

~~Condensed Consolidating Statement of Cash Flows~~

~~Six Months Ended June 30, 2018~~

~~(Dollars in millions)~~

Issuer
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Combining
and
Consolidating
Adjustments
Total
Cash Flows from Operating Activities:
Net income $ 12.8
$ 30.3
$ 17.2
$ (35.9 ) $ 24.4
Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization expense —
4.0
60.9
—
64.9
Deferred income tax expense (benefit) —
0.4
(0.1 ) —
0.3
Payments in excess of expense for postretirement plan benefits —
(0.4 ) (0.7 ) —
(1.1 )
Share-based compensation expense 1.6
—
—
—
1.6
Equity in loss of subsidiaries
(18.0 ) (17.9 ) —
35.9
—
Loss on extinguishment of debt 0.3
—
—
—
0.3
Loss from equity method investment —
—
5.4
—
5.4
Changes in working capital pertaining to operating activities:
Receivables —
4.8
(16.8 ) —
(12.0 )
Inventories —
(4.8 ) (0.6 ) —
(5.4 )
Accounts payable —
5.3
11.5
—
16.8
Accrued liabilities (0.1 ) (6.9 ) (2.0 ) —
(9.0 )
Deferred revenue —
—
1.5
—
1.5
Interest payable (1.0 ) —
(0.3 ) —
(1.3 )
Income taxes (0.7 ) 5.5
(4.8 ) —
—
Other 0.8
(1.4 ) (0.5 ) —
(1.1 )
Net cash (used in) provided by operating activities (4.3 ) 18.9
70.7
—
85.3
Cash Flows from Investing Activities:
Capital expenditures —
(1.2 ) (42.4 ) —
(43.6 )
Sale of equity method investment —
—
4.0
—
4.0
Other investing activities —
—
0.3
—
0.3
Net cash used in investing activities —
(1.2 ) (38.1 ) —
(39.3 )
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 45.0
—
—
—
45.0
Repayment of long-term debt (45.2 ) —
—
—
(45.2 )
Debt issuance cost (0.5 ) —
—
—
(0.5 )
Proceeds from revolving facility —
—
92.5
—
92.5
Repayments of revolving facility —
—
(92.5 ) —
(92.5 )
Repayment of financing obligation —
—
(1.3 ) —
(1.3 )
Acquisition of additional interest in the Partnership —
(4.2 ) —
—
(4.2 )
Cash distributions to noncontrolling interests —
—
(17.7 ) —
(17.7 )
Other financing activities
0.7
—
—
—
0.7
Net increase (decrease) in advances from affiliates 4.3
(1.6 ) (2.7 ) —
—
Net cash provided by (used in) financing activities 4.3

(5.8 )
(21.7 )
—
(23.2 )
Net increase in cash and cash equivalents —
11.9
10.9
—
22.8
Cash and cash equivalents at beginning of period —
103.6
16.6
—
120.2
Cash and cash equivalents at end of period $ —

$ 115.5

$ 27.5

$ —
$ 143.0

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains certain forward-looking statements of expected future developments, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe in our filings with the SEC, including this Quarterly Report on Form 10-Q, and under “Cautionary Statement Concerning Forward-Looking Statements.”

Currently, such risks and uncertainties also include: SunCoke’s ability to manage its business during and after the COVID-19 pandemic; the impact of the COVID-19 pandemic on SunCoke’s results of operations, revenues, earnings and cash flows; SunCoke’s ability to reduce costs and capital spending in response to the COVID-19 pandemic; SunCoke’s balance sheet and liquidity throughout and following the COVID-19 pandemic; SunCoke’s prospects for financial performance and achievement of strategic objectives following the COVID-19 pandemic; capital allocation strategy following the COVID-19-related outbreak; and the general impact on our industry and on the U.S. and global economy resulting from COVID-19, including actions by domestic and foreign governments and others to contain the spread, or mitigate the severity, thereof.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is based on financial data derived from the financial statements prepared in accordance with the United States (“~~U.S.~~”) generally accepted accounting principles (“GAAP”) and certain other financial data that is prepared using a non-GAAP measure. For a reconciliation of the non-GAAP measure to its most comparable GAAP component, see “Non-GAAP Financial Measures” at the end of this Item and Note 1413 to our consolidated financial statements.

Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flow.

Overview

SunCoke Energy, Inc. (“SunCoke Energy,” “SunCoke,” “Company,” “we,” “our” and “us”) is the largest independent producer of high-quality coke in the Americas, as measured by tons of coke produced each year, and has over 55 years of coke production experience. Coke is a principal raw material in the blast furnace steelmaking process and is produced by heating metallurgical coal in a refractory oven, which releases certain volatile components from the coal, thus transforming the coal into coke. We also ~~provide~~own and operate a logistics business that primarily provides handling and/or mixing services to steel, coke (including some of our domestic cokemaking facilities), electric utility, coal producing and other manufacturing based customers.

Cokemaking

We have designed, developed, built, own and operate five cokemaking facilities in the United States (“U.S.”), which consist of our Haverhill, Middletown, Granite City, Jewell and Indiana Harbor cokemaking facilities. These five cokemaking facilities have collective nameplate capacity to produce approximately 4.2 million tons of blast furnace ("furnace") coke per year. Additionally, we have designed and operate one cokemaking facility in Brazil under licensing and operating agreements on behalf of ArcelorMittal Brasil S.A. (“ArcelorMittal Brazil”), which has approximately 1.7 million tons of annual cokemaking capacity. To diversify our business and customer base, SunCoke has been exploring the foundry coke market and testing production capacity. We expect we will be in a position to produce and sell foundry coke and by-product industrial coke in 2021. Foundry coke is a high-quality grade of coke that is used at foundries to melt iron and various metals in cupola furnaces.

Our core business model is predicated on providing steelmakers an alternative to investing capital in their own captive coke production facilities. We direct our marketing efforts principally towards steelmaking customers that require coke for use in their blast furnaces. Our U.S. coke sales are made pursuant to long-term, take-or-pay agreements with ArcelorMittal USA LLC and/or its affiliates (“AM USA”), AK Steel ~~Holding~~ Corporation (“AK Steel”) and United States Steel Corporation (“U.S. Steel”), who are three of the largest blast furnace steelmakers in North America. These coke sales agreements have a weighted average remaining term of approximately ~~five~~six years based on annual nameplate capacity and contain pass-through provisions for costs we incur in the cokemaking process, including coal costs (subject to meeting contractual coal-to-coke yields), operating and maintenance expenses, costs related to the transportation of coke to our customers, taxes (other than income taxes) and costs associated with changes in regulation. The coal component of the Jewell coke price is based on the weighted-average contract price of third-party coal purchases at our Haverhill facility applicable to AM USA coke sales. ~~To date, our coke customers have satisfied their obligations under these agreements.~~

~~Our steelmaking~~ Steelmaking customers continue to operate in a challenging environment. In response to the decline in end user demand as well as in an ~~environment that is challenged by global overcapacity and during 2019 they have experienced declining steel sales prices. While U.S. Steel restarted both~~effort to slow the spread of the novel coronavirus ("COVID-19"), in March 2020, end user manufacturers began idling plants, which directly and adversely impacted our customers. As a result, U.S. steel production utilization rate declined approximately 25 percent from a stable 80 percent in December 2019 to approximately 55 percent in

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June 2020. In response to this decrease in demand for steel production, certain blast furnaces ~~at its Granite City Works facility during 2018, it recently announced it will temporarily idle two~~have idled and other ~~blast furnaces in the U.S. This does not~~steelmaking facilities that continue to operate have ~~a direct impact on~~turned down production. In order to help navigate through this challenging environment, SunCoke but it may impact the coke market. Imports of finished steel have decreased from approximately 23 percent of domestic steel consumption in 2018 to approximately 19 percent of domestic steel consumption in June of 2019. Despite the decrease in imports, domestic capacity utilization is below 80 percent. Due to the take-or-pay nature of our contractshas worked with our customers to provide near-term coke supply relief for customers in exchange for extending certain contracts. See further discussion in "Recent Developments."

We expect it will take substantial time to return to normalized production levels, but given current market uncertainties and uncertainty regarding the ~~declining~~duration, severity and potential resurgence on the COVID-19 pandemic, we cannot predict when production levels will normalize. Before steel production ramps back up, stockpiles throughout the supply chain likely will be utilized and end user demand ~~and lower prices are~~will likely not ~~expected~~return to ~~have a material impact on our full-year results.~~its previous levels until the overall economy recovers.

The coke sales agreement and energy sales agreement with AK Steel at our Haverhill facility are subject to early termination by AK Steel only if AK Steel meets both of the following two criteria: (1) AK Steel permanently shuts down operation of the iron producing portion of its Ashland Works Plant and (2) AK Steel has not acquired or begun construction of a new blast furnace in the U.S. to replace, in whole or in part, the Ashland Works Plant iron production capacity. If AK Steel were able to satisfy both criteria and chose to elect early termination, AK Steel must provide two years advance notice of the termination. During the two-year notice period, AK Steel must continue to perform under the terms of the coke sales agreement and energy sales agreement. On January 28, 2019, AK Steel announced its intention to permanently close its

Ashland Works Plant by the end of 2019. Were the Ashland Plant to permanently shut down, we believe AK Steel has not and would not satisfy the second criterion. No other coke sales agreement has an early termination clause.

Our Granite City facility and the first phase of our Haverhill facility, or Haverhill I, have steam generation facilities, which use hot flue gas from the cokemaking process to produce steam for sale to customers, pursuant to steam supply and purchase agreements. Granite City sells steam to U.S. Steel and Haverhill I provides steam, at minimal cost, to Altivia Petrochemicals, LLC. Our Middletown facility and the second phase of our Haverhill facility, or Haverhill II, have cogeneration plants that use the hot flue gas created by the cokemaking process to generate electricity, which either is sold into the regional power market or to AK Steel pursuant to energy sales agreements. Our Haverhill II facility amended agreement with AK Steel expires in 2021, at which time Haverhill II intends to continue to generate electricity for sale at prevailing market rates, either into the regional power market or to AK Steel.

The following table sets forth information about our cokemaking facilities and our coke and energy sales agreements as of June 30, ~~2019:~~

2020:

Facility

Location

Customer

Year of

Start Up

Contract

Expiration

Number of

Coke Ovens

Annual Cokemaking Nameplate

Capacity

(thousands of tons)

Use of Waste Heat

Facility

Location

Customer

Year of
Start Up

Contract
Expiration

Number of
Coke Ovens

Annual Cokemaking Nameplate

Capacity⁽¹⁾

(thousands of tons)

Use of Waste Heat

Owned and Operated:

Jewell

Vansant, Virginia

AM USA

1962

December 2020

142

720

Partially used for thermal coal drying

Jewell

Vansant, Virginia

AM USA

1962

December 2025⁽³⁾

142

720

Partially used for thermal coal drying

Indiana Harbor

East Chicago, Indiana

AM USA

1998

October 2023

268

1,220

Heat for power generation

Indiana Harbor

East Chicago, Indiana

AM USA

1998

October 2023

268

1,220

Heat for power generation

Haverhill Phase I

Franklin Furnace, Ohio

AM USA

2005

December 2020

100

550

Process steam

Haverhill Phase I

Franklin Furnace, Ohio

AM USA

2005

December 2025⁽³⁾

100

550

Process steam

Haverhill Phase II

Franklin Furnace, Ohio

AK Steel

2008

December 2021

100

550

Power generation

Haverhill Phase II

Franklin Furnace, Ohio

AK Steel

2008

June 2023⁽⁴⁾

100

550

Power generation

Granite City

Granite City, Illinois

U.S. Steel

2009

December 2024

120

650

Steam for power generation

Granite City

Granite City, Illinois

U.S. Steel

2009

December 2024

120

650

Steam for power generation

Middletown⁽¹⁾

Middletown, Ohio

AK Steel

2011

December 2032

100

550

Power generation

Middletown⁽²⁾

Middletown, Ohio

AK Steel

2011

December 2032

100

550

Power generation

830

4,240

830

4,240

Operated:

Vitória

Vitória, Brazil

ArcelorMittal Brazil

2007

January 2023

320

1,700

Steam for power generation

Vitória

Vitória, Brazil

ArcelorMittal Brazil

2007

January 2023

320

1,700

Steam for power generation

1,150

5,940

1,150

5,940


~~(1)~~	Cokemaking nameplate capacity represents stated capacity for production of blast furnace coke. The Middletown coke sales agreement provides for coke sales on a “run of oven” basis, which includes both blast furnace coke and small coke. Middletown nameplate capacity on a “run of oven” basis is 578 thousand tons per year.

(1)Cokemaking nameplate capacity represents stated capacity for production of blast furnace coke. The minimum tons in our coke sales agreements may be lower than the annual cokemaking nameplate capacity.

(2)The Middletown coke sales agreement provides for coke sales on a “run of oven” basis, which includes both blast furnace coke and small coke. Middletown nameplate capacity on a “run of oven” basis is 578 thousand tons per year.

(3)In July 2020, the Jewell and Haverhill Phase I contracts with AM USA were amended to extend contract expiration from December 2020 to December 2025. See "Recent Developments" for additional details.

(4)In July 2020, the Haverhill Phase II contract with AK Steel was amended to extend the contract expiration from December 2021 to June 2023. See "Recent Developments" for additional details.

Logistics

Our logistics business consists of Convent Marine Terminal (“CMT”), Kanawha River Terminal (“KRT”), Lake Terminal and Dismal River Terminal (“DRT”). CMT is one of the largest export terminals on the U.S. Gulf Coast. CMT provides strategic access to seaborne markets for coal and other industrial materials. ~~Supporting low-cost Illinois Basin coal producers, the~~The terminal provides loading and unloading services and has direct rail ~~access. With its top of the line shiploader, CMT~~access and has the current capability to transload 15 million tons ~~annually.~~annually with its top of

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the line shiploader. The facility ~~is supported by long-term contracts with volume commitments covering 10 million tons of its current capacity. The facility also~~ serves coal mining customers as well as other merchant business, including aggregates (crushed stone) and petroleum coke. CMT's efficient barge unloading capabilities complement its rail and truck offerings and provide the terminal with the ability to transload and mix a significantly broader variety of materials, including petroleum coke and other materials from barges at its dock. KRT is a leading metallurgical and thermal coal mixing and handling terminal service provider with collective capacity to mix and transload 25 million tons annually through its two operations in West Virginia. Lake Terminal and DRT provide coal handling and mixing services to SunCoke's Indiana Harbor and Jewell cokemaking operations, respectively.

Our logistics business has the collective capacity to mix and/or transload more than 40 million tons of coal and other aggregates annually and has storage capacity of approximately 3 million tons. ~~Our terminals act as intermediaries between our customers and end users by providing transloading and mixing services.~~ Materials are transported in numerous ways, including rail, truck, barge or ship. We do not take ~~possession~~title of the materials handled but instead derive our revenues by providing handling and/or mixing services to our customers on a per ton basis. Revenues are recognized when services are provided as defined by customer contracts.

~~Billings to CMT customers for take-or-pay volume shortfalls based on pro-rata volume commitments under take-or-pay contracts that are in excess of billings earned for~~ Logistics services provided to our domestic cokemaking facilities are ~~recorded as contract liabilities and characterized as deferred revenue on the Consolidated Balance Sheets. Deferred revenue will be recognized at the earliest~~provided under contracts with terms equivalent to those of i) when the performance obligation is satisfied; ii) when the performance obligation has expired, based on the terms of the contract; or iii) when the likelihood that the customer would exercise its right to the performance obligation becomes remote.arm's-length transactions.

~~The financial performance of our logistics business is substantially dependent upon a limited number of customers. Our~~ Certain CMT customers are impacted by seaborne export market dynamics. Fluctuations in the benchmark price for coal delivery into northwest Europe, as referenced in the Argus/McCloskey's Coal Price Index report (“API2 index price”), as well as Newcastle index coal prices, as referenced in the Argus/McCloskey's Coal Price Index report (“API6 index price”), which reflect low-ash coal prices shipped from Australia, contribute to our customers' decisions to place tons into the export market and thus impact transloading volumes through CMT. Our KRT terminals serve two primary domestic markets: metallurgical coal trade and thermal coal trade. Metallurgical markets are primarily impacted by steel prices and blast furnace operating levels, whereas thermal markets are impacted by natural gas prices and electricity demand.

API2 and API6 prices declined induring the first half of ~~2019 from the end of 2018~~2020 by approximately 435 percent and 2924 percent, respectively, ~~driven by~~reflecting the continued reduced demand from Europe, Asia and the Mediterranean regions and ~~increasing~~increased Russian coal supply. ~~While we expect~~Additionally, in an effort to slow the ~~U.S. to~~spread of COVID-19, many international ports continue to be closed, which has put further pressure on export volumes. Challenging market conditions have also impacted the volume of coal moving through our domestic logistics terminals, including the terminals that serve our own cokemaking facilities as a result of the volume relief provided to our Domestic Coke customers.

Historically, a significant ~~participant~~portion of our logistics business was derived from a long-term, take-or-pay contract with Foresight Energy LLC ("Foresight"). On March 10, 2020, Foresight filed for Chapter 11 bankruptcy and our contract with Foresight was subsequently rejected. CMT is handling Foresight tons in 2020 under a new contract with Javelin Global Commodities (UK) Ltd (“Javelin”) and is in the ~~seaborne coal trade, we anticipate export volumes to be lower in 2019 as compared to 2018. However, due to the take-or-pay nature~~process of ~~our contracts with coal export customers, lower export volumes do not have~~negotiating a ~~material impact on our expected full-year results.~~longer term contract.

Second Quarter Key Financial Results

Our consolidated results of operations were as follows:


	Three Months Ended June 30,							Six Months Ended June 30,								Three Months Ended June 30,						Increase (Decrease)			Six Months Ended June 30,						Increase (Decrease)
	2019		2018		Decrease			2019		2018		Decrease				2020		2019				Increase (Decrease)		2020			2019			Increase (Decrease)	Increase (Decrease)
	(Dollars in millions)															(Dollars in millions)
Net income	$	3.3	$	11.4	$	(8.1	)	$	15.5	$	24.4	$	(8.9	)	Net income	$	7.8	$	3.3	$	4.5	$	13.7		$	15.5		$	(1.8)	Increase (Decrease)

Net cash provided by operating activities	$	0.3	$	28.0	$	(27.7	)	$	35.6	$	85.3	$	(49.7	)	Net cash provided by operating activities	$	21.8	$	0.3	$	21.5	$	48.6		$	35.6		$	13.0
Adjusted EBITDA	$	63.1	$	67.3	$	(4.2	)	$	130.4	$	131.3	$	(0.9	)	Adjusted EBITDA	$	59.0	$	63.1	$	(4.1)	$	121.1		$	130.4		$	(9.3)

The three and six months ended June 30, 2020 reflect lower Logistics volumes as well as the impact of volume relief provided to certain Domestic Coke customers beginning during the second quarter, partly offset by the ongoing success of our oven rebuild program at Indiana Harbor. See detailed analysis of the quarter's results throughout the MD&A. See Note 1413 to our consolidated financial statements for the definition and ~~reconciliation~~reconciliation of Adjusted ~~EBITDA.~~EBITDA, a non-GAAP measure.

•COVID-19. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Our facilities have continued to operate during the COVID-19 pandemic due to our inclusion in the Critical Manufacturing Sector as defined by the U.S. Department of Homeland Security and ~~Items Impacting Comparability~~the designation as an essential business by state and local government authorities.

Our top priority has been and continues to be the safety and health of our employees and contractors. In response to the outbreak, we established an internal task force of subject matter experts, initiated enhanced health and safety

~~Simplification Transaction.~~ Prior to June 28, 2019, SunCoke owned a 60.4 percent limited partner interest in SunCoke Energy Partners, L.P. (the “Partnership”) as well as our 2.0 percent general partner interest. The remaining 37.6 percent limited partner interest in the Partnership was held by public unitholders. On June 28, 2019, the Company acquired all 17,727,249 outstanding common units of the Partnership not already owned by SunCoke in exchange for 24,818,149 newly issued SunCoke common shares (the "Simplification Transaction"). Additionally, the final pro-rated quarterly Partnership distribution was settled with 635,502 newly issued SunCoke common shares. Following the completion of the Simplification Transaction, the Partnership became a wholly-owned subsidiary of SunCoke.

measures across our facilities and enacted a work from home program for all qualifying personnel. The ~~Simplification Transaction was accounted~~majority of qualifying personnel have returned to working on-site. We have implemented screening procedures consistent with U.S. Centers for Disease Control (“CDC”) recommendations at each of our sites, which may include screen questionnaires and temperature checks for employees, contractors, or other service providers. Additionally, to ensure employee safety, we have also adopted protocols consistent with CDC, state, and local guidance, which include but are not limited to increased cleaning and disinfection, social distancing, physical separations, and, in certain instances, mask-wearing.

We are closely monitoring the impact of the outbreak of COVID-19 on all aspects of our business, including how it has and will impact our suppliers. We have not experienced any significant impacts or interruptions with respect to our ability to procure coal as a ~~non-cash equity transaction,~~result of COVID-19, and ~~no gain or loss was recognized~~we will continue to closely monitor our inventory levels to mitigate the risk of any potential supply interruptions.

•Customer Contract Amendments and Revised 2020 Guidance. Throughout the second quarter of 2020, SunCoke has been engaged in discussions with its steelmaking customers regarding market challenges presented by the current COVID-19 global pandemic. These discussions have addressed near-term coke supply relief for customers in exchange for extending certain contracts.

In July 2020, SunCoke reached an agreement with AK Steel for a supply reduction of 200 thousand tons of coke in 2020, including a 125 thousand ton reduction at Haverhill II and a 75 thousand ton reduction at Middletown, in exchange for extending the Haverhill II contract from December 31, 2021 to June 30, 2023.

Also in July 2020, SunCoke reached an agreement with AM USA to reduce supply by approximately 300 thousand coke tons in 2020 in exchange for extending the Haverhill I and Jewell contracts to December 31, 2025. Under the new contracts, SunCoke will produce a combined 800 thousand tons for the 2021 contract year and a combined 400 thousand tons on an annualized basis for the 2022 through 2025 contract years. In connection with these discussions, AM USA withdrew its notice declaring a force majeure event.

As we temporarily ramp down coke production in 2020 and address market conditions in the logistics business, we have taken several steps to reduce costs and optimize our operations. The impact of these actions along with lower volumes will result in a reduction in 2020 Adjusted EBITDA of $40 million to $50 million from our previous expectations. We now expect 2020 Adjusted EBITDA to be between $190 million and $200 million. Additionally, as a result of these changes as well as anticipated changes in working capital, we now expect full year 2020 cash from operating activities of approximately $116 million to $136 million. We also expect 2020 capital expenditures of approximately $80 million.

We are also evaluating our cost structure to ensure that we remain a low-cost provider. We have taken further actions, including a reduction in force, which is anticipated to result in full year savings of approximately $10 million in 2021.

Our business model is built on long-term customer relationships. The actions we have taken, together with our customers, not only address all the near-term contracts that were approaching expiration, but also further strengthen our long-term customer relationships and add meaningful certainty and stability to our business.

The Company expects that the impacts of COVID-19 and related economic conditions on our future results will continue to evolve in ways that are difficult to anticipate. See “Part II - Item 1A - Risk Factors” for additional discussion.

•2020 Revised Key Initiatives. With these new challenges, SunCoke's primary focus in 2020 will be to:

◦Successfully navigate through the COVID-19 pandemic. SunCoke will continue to make every effort to protect the safety and well-being of employees and contractors during this health crisis.

◦Deliver operational excellence and optimize asset base. SunCoke will continue to deliver strong operational performance and asset optimization while following all safety guidelines.

◦Support customer base and successful relief negotiation. SunCoke's business model is based on long-term partnerships with our coke customers. We will continue to support our customers to help them navigate through the current crisis, while providing long-term stability by navigating through successful customer relief negotiations.

◦Maintain asset integrity for long-term viability. SunCoke will ensure that assets are safeguarded during the current crisis situation to minimize any potential negative financial impact in the long-term. We will ensure our asset base is properly maintained, even as operating levels may fluctuate in the near term.

◦Achieve revised 2020 financial objectives. SunCoke is confident in our ~~Consolidated Statements~~liquidity position and will remain committed to achieving our revised financial targets of ~~Income for this transaction. The Company incurred transaction costs totaling $10.7 million,~~Adjusted EBITDA of which $5.4 million were incurred by SunCoke and were capitalized as a reduction to additional paid-in capital on the Consolidated Balance Sheets. The remaining transaction costs were incurred by the Partnership resulting in $4.4between $190 million and ~~$4.9~~$200 million ~~of expense included~~ in selling, general and administrative expenses on the Consolidated Statements of Income for the three and six months ended June 30, 2019, respectively, and $0.4 million were incurred during 2018. All transaction costs were excluded from Adjusted EBITDA. We do not expect to incur significant additional costs related to this transaction.2020.

With the closing of the Simplification Transaction, the income previously attributable to noncontrolling interest in the Partnership became 100 percent attributable to SunCoke and, therefore, will now be taxable to the Company, which increased the Company's estimated annual effective tax rate by approximately 8 percent.

~~India Equity Method Investment.~~ On June 27, 2018, we sold our 49 percent investment in VISA SunCoke Limited ("VISA SunCoke") for cash consideration of $4.0 million. Consequently, we recognized $9.0 million of accumulated currency translation losses and incurred $0.4 million of transaction costs, resulting in a net $5.4 million loss from equity method investment during the three and six months ended June 30, 2018 on the Consolidated Statements of Income.

Results of Operations

The following table sets forth amounts from the Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019, ~~and 2018,~~ respectively:

Sales and Other Operating Revenue and Costs of Products Sold and Operating Expenses. Sales and other operating revenue and costs of products sold and operating expenses ~~increased~~decreased for the three and six months ended June 30, ~~2019~~2020 compared to the same prior year ~~periods,~~period, primarily due to the pass-through of ~~higher~~lower coal prices in our Domestic Coke ~~segment.~~segment, which also resulted in improved margins. Lower volumes ~~at CMT partly offset~~in our Logistics segment decreased sales and operating revenue during the ~~benefit~~three and six months ended June 30, 2020. Additionally, Domestic Coke volumes decreased during the three months ended June 30, 2020, as a result of ~~higher coal prices on revenues.~~volume relief provided to our customers impacted by the COVID-19 pandemic.

Selling, General and Administrative Expenses. Selling, general and administrative expenses benefited during the three and six months ended June 30, ~~2019 increased as compared~~2020 due to the ~~same~~absence of $4.4 million and $4.9 million, respectively, of transaction costs incurred during the prior year ~~periods primarily due to costs associated with the Simplification Transaction.~~periods.


PART I – FINANCIAL INFORMATION

~~PART I – FINANCIAL INFORMATION~~

Item 1. Consolidated Financial Statements	1

Consolidated Statements of Income (Unaudited) For the Three and Six Months Ended June 30 , 2020 and 2019 ~~and 2018~~		1

Consolidated Statements of Comprehensive Income (Unaudited) For the Three and Six Months Ended June 30 , 2020 and 2019 ~~and 2018~~		2

Consolidated Balance Sheets at June 30 ~~2019~~, 2020 (Unaudited) and December 31, ~~2018~~2019		3

Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30 , 2020 and 2019 ~~and 2018~~		4

Consolidated Statements of Equity (Unaudited) For the ~~Three and~~ Six Months Ended June 30 , 2020 and 2019 ~~and 2018~~		5

Notes to the Consolidated Financial Statements		7

1. General		7

2. Acquisitions		87

3. Inventories		98

4. Goodwill and Other Intangible Assets		98

5. Income Taxes		98

6. Accrued Liabilities		109

7. Debt and Financing Obligation		109

8. Commitments and Contingent Liabilities		1110

9. ~~Leases~~Share-Based Compensation		1211

10. ~~Share-Based Compensation~~Earnings per Share		13

11. ~~Earnings per Share~~Fair Value Measurement		1613

12. ~~Fair Value Measurement~~		17

~~13.~~ Revenue from Contracts with Customers	1814

~~14.~~13. Business Segment Information		1914





~~15. Supplemental Condensed Consolidating Financial Information~~		21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3018

Item 3. Quantitative and Qualitative Disclosures about Market Risk		4432

Item 4. Controls and Procedures		4432

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		4533

Item 1A. Risk Factors		4533

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4534

Item 4. Mine Safety Disclosures		4534

Item 6. ~~Exhibits~~Exhibits*		4635

Signature		4736

*Included as Exhibit 99.1 to this Quarterly Report on Form 10-Q are unaudited financial statements of SunCoke Energy Partners Finance Corp. ("Finance Corp."), to comply with applicable reporting requirements of the indenture dated May 24, 2017, by and among SunCoke Energy Partners, L.P. ("the Partnership"), which merged with and into Finance Corp. on January 1, 2020 and resulted in Finance Corp. replacing the Partnership as the issuer pursuant to a supplemental indenture, and The Bank of New York Mellon Trust Company, N.A., as amended by the supplemental indentures, dated August 5, 2019 and January 1, 2020.



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	June 30, 2019			December 31, 2018
	(Unaudited)
	(Dollars in millions, except par value amounts)
Assets
Cash and cash equivalents	$	102.2		$	145.7
Receivables	98.9			75.4
Inventories	175.7			110.4
Income tax receivable	3.2			0.7
Other current assets	4.9			2.8
Total current assets	384.9			335.0
Properties, plants and equipment (net of accumulated depreciation of $901.6 million and $855.8 million at June 30, 2019 and December 31, 2018, respectively)	1,454.8			1,471.1
Goodwill	76.9			76.9
Other intangible assets, net	151.4			156.8
Deferred charges and other assets	14.4			5.5
Total assets	$	2,082.4		$	2,045.3
Liabilities and Equity
Accounts payable	$	137.2		$	115.0
Accrued liabilities	49.9			45.6
Deferred revenue	13.5			3.0
Current portion of long-term debt and financing obligation	5.1			3.9
Interest payable	3.9			3.6
Total current liabilities	209.6			171.1
Long-term debt and financing obligation	828.0			834.5
Accrual for black lung benefits	46.4			44.9
Retirement benefit liabilities	24.1			25.2
Deferred income taxes	212.8			254.7
Asset retirement obligations	13.4			14.6
Other deferred credits and liabilities	25.3			17.6
Total liabilities	1,359.6			1,362.6
Equity
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no issued shares at both June 30, 2019 and December 31, 2018	—			—
Common stock, $0.01 par value. Authorized 300,000,000 shares; issued 98,036,174 and 72,233,750 shares at June 30, 2019 and December 31, 2018, respectively	1.0			0.7
Treasury stock, 7,477,657 shares at both June 30, 2019 and December 31, 2018	(140.7		)	(140.7		)
Additional paid-in capital	709.7			488.8
Accumulated other comprehensive loss	(13.0		)	(13.1		)
Retained earnings	139.5			127.4
Total SunCoke Energy, Inc. stockholders’ equity	696.5			463.1
Noncontrolling interests	26.3			219.6
Total equity	722.8			682.7
Total liabilities and equity	$	2,082.4		$	2,045.3



	(Dollars in millions)
Noncontrolling interest	$	(182.5	)
Deferred income taxes	$	(43.7	)
Common stock	$	0.3
Additional paid-in capital	$	225.9


	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	2019		2018			2019		2018
	(Dollars in millions)											(Dollars in millions)
Net income attributable to SunCoke Energy, Inc.	$	2.3	$	4.2		$	12.1	$	12.9		Net income attributable to SunCoke Energy, Inc.	$	2.3		$	12.1
Increase (decrease) in SunCoke Energy, Inc. equity for the change in ownership interest in the Partnership⁽¹⁾	182.5		(0.3		)	182.5		(1.5		)
Increase in SunCoke Energy, Inc. equity for the change in ownership interest in the Partnership⁽¹⁾											Increase in SunCoke Energy, Inc. equity for the change in ownership interest in the Partnership⁽¹⁾	182.5			182.5
Change from net income attributable to SunCoke Energy, Inc. and transfers from noncontrolling interest	$	184.8	$	3.9		$	194.6	$	11.4		Change from net income attributable to SunCoke Energy, Inc. and transfers from noncontrolling interest	$	184.8		$	194.6



		June 30, 2019						December 31, 2018
	Weighted - Average Remaining Amortization Years	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net

		(Dollars in millions)
Customer contracts	3	$	31.7	$	19.6	$	12.1	$	31.7	$	17.7	$	14.0
Customer relationships	13	28.7		8.5		20.2		28.7		7.5		21.2
Permits	23	139.0		19.9		119.1		139.0		17.4		121.6
Total		$	199.4	$	48.0	$	151.4	$	199.4	$	42.6	$	156.8


~~(1)~~	~~Includes expenses for month-to-month equipment leases, which are classified as short-term as the Company is not reasonably certain to renew the lease term beyond one month.~~


~~(2)~~	~~Includes variable lease expenses, which are immaterial to the consolidated financial statements.~~



	Financial Statement Classification	June 30, 2019
		(Dollars in millions)
Operating ROU assets	Deferred charges and other assets	$	10.3

Operating lease liabilities:
Current operating lease liabilities	Accrued liabilities	$	1.8
Noncurrent operating lease liabilities	Other deferred credits and liabilities	$	8.0
Total operating lease liabilities		$	9.8



	Six months ended June 30, 2019
	(Dollars in millions)
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	2.6
Non-cash activity:
ROU assets obtained in exchange for new operating lease liabilities	$	5.0



	(Dollars in millions)
Year ending December 31:
2019⁽¹⁾	$	1.1
2020	1.9
2021	1.7
2022	1.2
2023	0.9
2024-Thereafter	5.2
Total lease payments	12.0
Less: imputed interest	2.2
Total lease liabilities	$	9.8



	Minimum Rental Payments
	(Dollars in millions)
Year ending December 31:
2019	$	2.0
2020	1.1
2021	1.0
2022	0.5
2023	0.1
2024-Thereafter	0.7
Total	$	5.4



		Weighted Average Per Share
	Shares	Exercise Price		Grant Date Fair Value
Traditional stock options	267,897	$	9.87	$	4.09


~~(1)~~	The PSU awards are split 50/50 between the Company's three year cumulative Adjusted EBITDA performance measure and the Company's three-year average pre-tax return on capital performance measure for its coke and logistics businesses and unallocated corporate expenses.


~~(2)~~	The number of PSUs ultimately awarded will be determined by the above performance measures versus targets and the Company's three-year total shareholder return (“TSR”) as compared to the TSR of the companies making up the Nasdaq Iron & Steel Index (“TSR Modifier”). The TSR Modifier can impact the payout between 75 percent and 125 percent of the Company's final performance measure results.


~~(1)~~	~~Compensation expense recognized by the Company is included in selling, general and administrative expenses on the Consolidated Statements of Income.~~


~~(1)~~	~~The 25,453,651 SunCoke common shares issued in conjunction with the Simplification Transaction had a minimal impact on the weighted-average common shares outstanding due to the timing of issuance.~~



	Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Revenues
Sales and other operating revenue	$	—		$	62.0		$	346.7		$	(1.2	)	$	407.5
Equity in earnings of subsidiaries	4.5			56.6			—			(61.1		)	—
Total revenues, net of equity earnings of subsidiaries	4.5			118.6			346.7			(62.3		)	407.5
Costs and operating expenses
Cost of products sold and operating expense	—			45.6			282.6			(1.2		)	327.0
Selling, general and administrative expense	2.5			4.1			15.3			—			21.9
Depreciation and amortization expense	—			2.2			34.8			—			37.0
Total costs and operating expenses	2.5			51.9			332.7			(1.2		)	385.9
Operating income	2.0			66.7			14.0			(61.1		)	21.6
Interest (income) expense, net - affiliate	—			(0.6		)	0.6			—			—
Interest expense (income), net	0.8			(0.5		)	14.8			—			15.1
Total interest expense (income), net	0.8			(1.1		)	15.4			—			15.1
Income (loss) before income tax (benefit) expense	1.2			67.8			(1.4		)	(61.1		)	6.5
Income tax (benefit) expense	(1.1		)	61.8			(57.5		)	—			3.2
Net income	2.3			6.0			56.1			(61.1		)	3.3
Less: Net income attributable to noncontrolling interests	—			—			1.0			—			1.0
Net income attributable to SunCoke Energy, Inc.	$	2.3		$	6.0		$	55.1		$	(61.1	)	$	2.3
Comprehensive income	$	2.4		$	6.0		$	56.3		$	(61.3	)	$	3.4
Less: Comprehensive income attributable to noncontrolling interests	—			—			1.0			—			1.0
Comprehensive income attributable to SunCoke Energy, Inc.	$	2.4		$	6.0		$	55.3		$	(61.3	)	$	2.4


~~(1)~~	The decrease during the three and six months ended June 30, 2019 was the result of lower earnings at the Partnership, reflecting lower operating results, higher depreciation expense and costs related to the Simplification Transaction.


	Three Months Ended June 30,									Increase (Decrease)				Six Months Ended June 30,							Increase (Decrease)
	2020			2019									2020				2019

	(Dollars in millions)
Sales and other operating revenues:
Domestic Coke	$	323.5		$	378.0		$	(54.5)		$	688.7			$	737.3			$	(48.6)
Brazil Coke	7.2			10.0			(2.8)			15.7				19.7				(4.0)
Logistics	7.3			19.5			(12.2)			16.3				41.8				(25.5)
Logistics intersegment sales	5.2			6.7			(1.5)			11.8				13.2				(1.4)
Elimination of intersegment sales	(5.2)			(6.7)			1.5			(11.8)				(13.2)				1.4
Total sales and other operating revenues	$	338.0		$	407.5		$	(69.5)		$	720.7			$	798.8			$	(78.1)
Adjusted EBITDA⁽¹⁾:
Domestic Coke	$	61.6		$	56.3		$	5.3		$	125.0			$	114.8			$	10.2
Brazil Coke	3.2			4.3			(1.1)			7.3				8.8				(1.5)
Logistics	3.0			11.8			(8.8)			6.3				24.5				(18.2)
Corporate and Other⁽²⁾	(8.8)			(9.3)			0.5			(17.5)				(17.7)				0.2
Total Adjusted EBITDA	$	59.0		$	63.1		$	(4.1)		$	121.1			$	130.4			$	(9.3)
Coke Operating Data:
Domestic Coke capacity utilization	94		%	97		%	(3)		%	98		%		97		%		1		%
Domestic Coke production volumes (thousands of tons)	987			1,030			(43)			2,056				2,036				20
Domestic Coke sales volumes (thousands of tons)	977			1,030			(53)			2,041				2,034				7
Domestic Coke Adjusted EBITDA per ton⁽³⁾	$	63.05		$	54.66		$	8.39		$	61.24			$	56.44			$	4.80
Brazilian Coke production—operated facility (thousands of tons)	270			424			(154)			680				843				(163)
Logistics Operating Data:
Tons handled (thousands of tons)	2,853			5,592			(2,739)			7,067				11,376				(4,309)


~~(1)~~	See Note 14 in our consolidated financial statements for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement for the three and six months ended June 30, 2019 and 2018.


~~(2)~~	Corporate and Other includes the activity from our legacy coal mining business, which contributed Adjusted EBITDA losses of $2.0 million and $3.8 million during the three and six months ended June 30, 2019, respectively, and $2.4 million and $4.7 million for the three and six months ended June 30, 2018, respectively.


~~(3)~~	~~Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.~~Table of Contents


~~(5)~~	~~Reflects tons billed under take-or-pay contracts where services have not yet been performed.~~



	Three months ended June 30, 2019 vs. 2018					Six months ended June 30, 2019 vs. 2018
	Sales and other operating revenue			Adjusted EBITDA		Sales and other operating revenue			Adjusted EBITDA
	(Dollars in millions)
Prior year period	$	328.7		$	52.9	$	646.8		$	107.2
Volumes⁽¹⁾	5.3			0.2		12.2			3.0
Coal cost recovery and yields⁽²⁾	49.6			—		84.4			0.7
Operating and maintenance costs⁽³⁾	(2.4		)	3.0		(2.4		)	4.0
Energy and other	(3.2		)	0.2		(3.7		)	(0.1		)
Current year period	$	378.0		$	56.3	$	737.3		$	114.8


~~(1)~~	~~The increase in volumes was driven by improved performance from rebuilt ovens at our Indiana Harbor facility.~~


~~(2)~~	Higher coal prices resulted in favorable coal cost recovery, benefiting revenues and Adjusted EBITDA. This benefit was offset by lower coal-to-coke yields, which decreased Adjusted EBITDA $4.0 million and $7.4 million during the three and six months ended June 30, 2019, respectively, and includes the impact of higher coal moistures as a result of heavy rainfall during the first half of 2019.


~~(3)~~	Improved cost control resulted in lower pass-through operating and maintenance costs, decreasing our revenues. Additionally, favorable recovery of operating and maintenance costs benefited Adjusted EBITDA during both the three and six months ended June 30, 2019.


	Three Months Ended June 30, 2020 vs. 2019						Six Months Ended June 30, 2020 vs. 2019
	Sales and other operating revenue		Adjusted EBITDA		Sales and other operating revenue		Adjusted EBITDA
	(Dollars in millions)
Prior year period	$	378.0	$	56.3	$	737.3	$	114.8
Volumes⁽¹⁾	(13.9)		(4.7)		9.0		1.3
Coal cost recovery and yields⁽²⁾	(42.8)		0.7		(61.3)		(2.0)
Operating and maintenance costs⁽³⁾	2.4		9.5		2.3		11.4
Energy and other	(0.2)		(0.2)		1.4		(0.5)
Current year period	$	323.5	$	61.6	$	688.7	$	125.0



	Three months ended June 30, 2019 vs. 2018						Six months ended June 30, 2019 vs. 2018
	Sales and other operating revenue, inclusive of intersegment sales			Adjusted EBITDA			Sales and other operating revenue, inclusive of intersegment sales			Adjusted EBITDA
	(Dollars in millions)
Prior year period	$	33.6		$	19.7		$	61.3		$	33.3
Transloading volumes⁽¹⁾	(8.2		)	(7.2		)	(10.0		)	(9.1		)
Price/margin impact of mix in transloading services	1.0			1.0			2.1			2.1
Operating and maintenance costs and other	(0.2		)	(1.7		)	1.6			(1.8		)
Current year period	$	26.2		$	11.8		$	55.0		$	24.5